MarketWatch's Arends: Stocks May Be Most Overvalued in History

Monday, 11 Aug 2014 07:25 AM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Many analysts say the stock market may be overvalued, but certainly not as much as in 1999-2000.

MarketWatch columnist Brett Arends isn't so sure. Stocks may now be more overvalued than ever before, he writes.

Joachim Klement of Wellershoff & Partners examined the biggest 1,500 stocks by market value for Arends and found that the median stock has a price-to-earnings ratio of 20 times, compared with 16 times in January 2000.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

The median stock currently trades at 2.5 times book value, compared to 2.2 times back then. The median stock also now trades at 1.8 times revenue-per-share, up from 1.4 times.

Dividend yields represent the only metric showing the median stock is less overvalued now than in 2000, Arends says. That yield is now 1.3 percent, up from 0.8 percent in 2000.

"There are some caveats," he writes. "Each individual measure is subject to a lot of variability and noise." In addition, Klement's data may be influenced by survivorship bias. He only studied today's top 1,500 stocks, excluding some that have slipped since 2000.

Retail investors appear to be worried about the market.

The American Association of Individual Investors survey of its members for the week ended August 6 show that 38.2 percent of them have a bearish view of the stock market for the next six months. That's the highest level since last August 22 and is up from 31.1 percent a week ago.

It "suggests some investors believe the market's upward momentum is being interrupted," Charles Rotblut, vice president of the association, said in a statement.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

Related Stories:

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Shiller: Talk of 'Secular Stagnation' May Have Tripped Stock Market

Monday, 20 Oct 2014 20:11 PM

Nobel laureate economist Robert Shiller of Yale says stories about a global slowdown and deflation, which he says add up . . .

Roubini: Global Economic Slowdown May Spill into US

Monday, 20 Oct 2014 19:50 PM

While star economist Nouriel Roubini of NewYork University expects U.S. economic growth to total about 3 percent annuali . . .

Top Fed Officials Come Down Hard on Big Banks

Monday, 20 Oct 2014 18:00 PM

Banks must change the way employees are compensated and take other steps to fix a corporate culture that encourages misd . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved