u/goldman_capital

1. Cyclically Adjusted PE Ratio (CAPE or Shiller PE or P/E 10 Ratio) based on average inflation-adjusted earnings of the previous 10 years headed to dot-com bubble peak:

Source: longtermtrends.com

2. S&P 500 forward P/E Ratio assumes near 0% subsequent 10-year annualized returns:

Source: am.jpmorgan.com

3. Nasdaq to S&P00 Ratio is above dot-com bubble peak:

Source: longtermtrends.com

4. Inflation adjusted S&P 500 is far above exponential long-term trend:

Source: currentmarketvaluation.com

5. Stocks entered overpriced zone against bonds:

Source: currentmarketvaluation.com

Bottom line:

• Overvalued stocks and deviations from trend line can last for extended periods. 
• It’s neither a signal for selling stocks, nor buying for a long-term.
• Better way is to sell stocks and rebalance in favor of bond ETFs deploying Dollar-cost averaging approach by selling a fixed dollar amount or a fixed percentage of stock holdings at regular intervals, regardless of the share price.

1. Cyclically Adjusted PE Ratio (CAPE Ratio or Shiller PE Ratio) based on average inflation-adjusted earnings of the previous 10 years headed to dot-com bubble peak:

Source: longtermtrends.com

2. S&P 500 forward P/E ratio assumes the near 0% subsequent 10-year annualized returns:

Source: am.jpmorgan.com

3. Nasdaq to S&P00 Ratio is above dot-com bubble peak:

Source: longtermtrends.com

4. Inflation adjusted S&P 500 is far above exponential long-term trend:

Source: currentmarketvaluation.com

5. Stocks entered overpriced zone against bonds:

Source: currentmarketvaluation.com

Bottom line:

• Overvalued stocks and deviations from trend line can last for extended periods. 
• It’s neither a signal for selling stocks, nor buying for a long-term.
• Better way is to sell stocks and rebalance in favor of bond ETFs deploying Dollar-cost averaging approach by selling a fixed dollar amount or a fixed percentage of stock holdings at regular intervals, regardless of the share price.