Sky-High Stock Valuations Signal Lower Returns Ahead, Though Crash Risk Appears Low
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Valuation metrics suggest stocks are very expensive historically, implying lower future returns.
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High valuations indicate overly bullish investor sentiment more than an imminent market crash.
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Warren Buffett is struggling to find attractively priced companies to acquire given high valuations.
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Market cap to GDP ratio shows stocks are trading far above historical norms relative to economic output.
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Investors are ignoring fundamentals and high valuations due to FOMO, much like prior bubbles, but high valuations still portend lower future returns.