The US Market Valuations are at the highest peak ever. There are 2 ways we can look at this.
1: The Buffett Indicator (aka, Buffett Index, or Buffett Ratio) is the ratio of the total United States stock market to GDP.
As we can see from the below Current Market Valuations chart we are currently higher than Internet Bubble and Covid Peak. This of course does not take into account the international business of US companies but clearly shows that there are no alternate places to invest money and high risk appetite of Gen Z and Gen Alpha.
2: US Market PE Ratio
As we can see the PEAK PE during Dot Com Boom was 46 and during Financial crisis around 100+. We are currently at PE of 30. This is significantly overvalued considering we are paying a price of 30 USD for earnings of 1 USD.
While what will happen is for everyone to see in 2-3 years. However given the attention span on history it is clear that we have forgotten what happens when we overpay for the stocks.
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