Finance

When the stock market is this overvalued, it is usually lower 12 months later

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The stock market could be in trouble after its historic surge from the late-March lows as valuations become increasingly elevated, data compiled by RBC Capital Markets showed.

The S&P 500‘s trailing price-to-earnings ratio, a widely used valuation metric, is currently sitting at 21.61. That’s near the highs seen in early 2020, when the broader market index was trading at an all-time high. The forward S&P 500 PE ratio, which is measured using earnings estimates for the next 12 months, has jumped to 22.18, near its highest levels in almost two decades.

RBC’s data shows the market tends to fall over the next 12 months when valuations are this high, raising concern about the market’s…



Source cnbc.com

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