With relatively little fanfare,
the stock market has become expensive again.
While the rest of economy has been growing frustratingly slowly
for almost five years, stocks have been rising at a boomlike clip. An
investment in the Standard & Poor 500-stock index would have doubled from early 2009
through early 2013 and then gained an additional 18 percent over the last year.
Relative to long-term corporate earnings – and more in a minute
on why that measure is important – stocks have been more expensive only three
times over the past century than they are today, according to data from Robert
Shiller, a Nobel laureate in economics. Those other three periods are not
exactly reassuring, either: the 1920s, the late 1990s and in the prelude to the
2007 financial crisis.
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