The United States Is The Highest Valued Country On Earth
In the past couple weeks, we’ve taken a bit of a break from talking about the sky-high market valuations right now to talk about inflation, interest rates, debt, and Covid as huge risks to your portfolio.
These are still important to watch as I talked about in yesterday’s article which you can see below.
Today, we get back to talking about the markets sky high valuation because it’s now official.
The United States Is The Highest Valued Country On Earth.
This according to the Cyclically Adjusted PE ratio… Its also known as the Shiller PE or CAPE for short.
The current CAPE ratio now sits at 37.11 for the S&P 500 index.
What does this mean?
This valuation is higher than at any point going back to the 1870’s at any other point in history other than right before the Tech Bubble burst in 2000.
Yes, the market is now more overvalued than right before The Great Depression… And it’s not close.
The peak CAPE right before The Great Depression was around 30.
This means the market now is 23.7% more overvalued now than it was right before The Great Depression.
The markets current valuation is so extraordinarily extreme that according to Barclays Bank via MarketWatch, the average CAPE ratio for 25 develop nations stock markets is 21.4… This is just over half the S&P 500’s current ratio.
Why is the sky-high valuation important for you?
Because when valuations are high it makes investing riskier… And it also means you should expect lower returns going forward.
The chart above is again from Barclays via MarketWatch and shows that the higher the CAPE ratio right before the 2000 Tech Bubble popped… The farther the stock market fell after the crash.
The saying the bigger they are the harder they fall – that applies to valuations.
I’ve warned about this for months in the following articles.
- A $1.4 Trillion Sign We’re Dealing With A Massive Market Mania
- “The Stock Market Is In One Of The Bubbles In Financial History
And its only getting worse.
When I first warned you to watch the markets valuations on February 20th, the CAPE ratio was around 35.
Now its even higher as you saw above.
Everyone in the financial media keeps saying things are great… And they are at the surface level.
But when you dig deeper you see valuation risks, interest rates rising, inflation, debt levels at all-time highs, etc.
I’ve been telling you about these for months now to warn you what others won’t.
With the US now having officially the highest market valuation in the world – this means the risks are even higher than they were when I first warned you about this three months ago.
To find out how to protect your portfolio from inflation and the other risks I see out there read the following articles.
- Steps To Take Now As Inflation Rises
- What Should You Do As Home Prices Skyrocket?
- Do This As US GDP Grows At The Fastest Rate In 40 Years
- Why You Must Build An Emergency Fund Now
- 1 Tip To Protect Your Retirement – Avoid Bonds
And do the following with any extra money you can generate… Make sure you’re invested in great stocks that have the following traits…
- They’re cheap.
- They have little to no debt compared to a lot of cash.
- They produce large profits and cash flows.
- They pay dividends.
- And make sure they aren’t in industries that could be hammered by Covid.
These kinds of stocks – the ones I try to find for you every day – are things you should continue investing in because they will provide you good to great returns no matter what the market is doing.
All while protecting you from the major risks like valuation, unemployment, debt, and inflation.
Here are some of those stocks I’ve already found for you to consider investing in to protect your portfolio…
Your guide to financial freedom and achieving your retirement goals.
Always in your service,
Publisher Stock Market Daily
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