According to two measures of value, the answer is yes—and dangerously so. According to the CAPE ratio, the stock market is 185% overvalued. Another measure, the q ratio, has it at 80%. It has been overpriced only twice: in September 1929, right before the Great Depression, and in March 2000, at the tail-end of the dot-com bubble.
My prediction is that it will be more difficult for both U.S. stocks and bonds to go up in the coming years. Either the economy will recover and push interest rates higher and bond prices lower or we will experience a double-dip recession with falling stock prices.
What is the greatest success in this industry, and what is the failure or challenge you have learned the most from? Understanding how our banking and financial system works. Without this understanding, financial advisors walk around in the dark without a flashlight.
Many retirees who are frustrated by low rates have put money that was earmarked for bonds into stocks, hoping the dividends plus the growth will provide sufficient income.
