The Showdown That Never Came: Part II

In Part I of our analysis we used different indicators to demonstrate that the US stock market – in particular the S&P 500 (NYSEARCA: SPY) and the Dow Jones Industrial Average (NYSEARCA: DIA) – is overvalued. What we didn’t really discuss is the question if the obviously high valuation can’t somehow be justified. We will focus mainly on the CAPE as valuation method in this article and talk about two different possible reasons that could supposedly justify the high valuations. And once again I will return to the question if I have been wrong with my thesis that the stock market needs a correction.

Continue reading (on Seeking Alpha)