The US stock market is highly overvalued. Here’s why…

Jon Alternative Media, Economy, Market Commentary

This is really starting to get out of control.
No doubt you’re familiar with the S&P 500, the stock index that measures the performance of the largest US companies.
And as we’ve discussed before, one of the most important benchmarks in measuring whether stocks are overvalued or undervalued is the Price/Earnings, or P/E ratio.
Looking back through more than a century of financial data, the long-term average P/E ratio for the S&P 500 has been about 15.
As of yesterday afternoon, the P/E ratio for the S&P 500 stock index reached 26.5.
That’s high – more than 75% higher than the long-term average.
More importantly, since the 1870s, there have been a total of THREE periods in which the average stock P/E ratio was above 26.5.
The first time was around the Panic of 1893.
The second was around the 2000 dot-com crash.
And the third was around the 2008 financial collapse.
See the pattern? Whenever financial markets get overheated, bad things tend to happen.

This post was published at Sovereign Man on February 23, 2017.