In this White Paper, A Clear-Eyed Look at Where We Stand – Market Valuation, Time, and the Path Back to Normal, we discuss what the valuation of market using 3 well known metrics and the potential paths to normalization.
U.S. equity valuations are at or near the most elevated levels of the past several decades, but history reminds us that valuation alone is a poor predictor of near-term market returns. Rather than signaling an imminent correction, today’s environment suggests that a return toward more normal valuations will likely require some combination of time, continued earnings growth, and price adjustment—reinforcing the importance of disciplined risk management and portfolios positioned for a wider range of outcomes.