The Market: Too High? Too Low?

Why so many valuation models are so wrong

Wonder if the stock market is out of whack? Click onto Dismal Scientist at and slide your mouse over to the market-valuation calculator. Plug in a couple of commonly used figures--a 5% growth rate for earnings, say, and a yield of 5% on the 10-year Treasury bond--and the calculator offers up some distressing news: The Standard & Poor's 500-stock index, it says, is 11.2% overvalued, even after the Mar. 23 plunge.

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