Is the U.S. Stock Market

Massively

Overvalued?

DYI:  No matter what type of valuation method used the U.S. stock market is massively overvalued.  This chart from Advisor Perspectives using the average of four measuring methods (see chart above) stocks are now 176% above the mean or around 3.75 standard deviation above as well.  Clearly the upside potential is now significantly less than the downside. 

To provide an insight, if stocks dropped from here by 50% they would remain marginally overvalued!  A 65% decline would be required to solidly place stocks in the undervalued category! 

IMO stocks will once again revert from this massive overvaluation all the way to massive undervaluation.  Please note the possibility of doing this all at once is very remote.  What is more plausible is a combination of declining prices plus the erosion of return by inflation such as experienced from 1965 to 1985 with multiple rollercoaster rises and falls.