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Warnings of a Stock Market Bubble Finally Prove Too Much for S&P 500

  • The PEG model points to an extended market with few precedents
  • The danger: Growth is at risk while valuation pressure builds
Bloomberg business news
AQR's Cliff Asness on 60/40 Strategy, Market Risks

Wagering on the stock market bounce was always a long shot. Now it looks like a sucker’s bet.

While the reemergence of hotter-than-forecast inflation was the proximate cause of the latest plunge, another force is also at play in the second-longest series of weekly declines since May: high valuations. One lens that takes account of the increasingly anemic growth expected in S&P 500 earnings shows equities as richly priced as they’ve been in almost three decades of data.