Valuation Indicators

Stock Market Valuation Indicators
The Markets in 2017 have been stagnant in most World markets except in the USA, after the Trump election rally. Gaging by historical valuation indicators, stocks and bonds are currently overvalued.
Since the 2008 crisis, the Markets have shown a "false" recovery, not due to private investors buying assets, but rather due to central and retail banks creating liquidity by buying assets, due central banks printing money.
Rather then follow the traditional Fundamental Analysis analogies, the majority of investors go by what central banks say and do. This will change as more people start to question what these banks are doing to their economies.
Be cautious as we do not currently have a free market.
Projected Annual Returns.
The chart below shows the projected annual  market returns.

The Shiller PE Ratio Valuation Indicator
The chart below shows the current Shiller PE ratio, which historically shows that the SP 500 stock index is overvalued.
It is way above the Mean Line and the 2nd highest in history.

The Ratio of Total Market Cap to US GDP
The chart below shows the Stock Market is Significantly Overvalued. Based on historical ratio of total market cap over GDP (currently at 143.4%), it is likely to return -2.1% a year from this level of valuation, including dividends.

The Buffett Valuation Indicator

Buffet Indicator

Recession Alert

Recession Alert

Gross Federal Debt as percent of the US GDP

NYSE Margin Debt
Margin debt is debt investors takes on by trading on margins. Such debt occurs when investors borrow part of the initial capital from the broker instead of covering the entire upfront cost with cash. The borrowed part is the margin debt and the portion funded with cash is the margin. As a market indicator, the margin debt is the aggregate borrowings taken on by the market as a whole. NYSE market watchers try to anticipate economic recessions based on changes in margin debt. (Source: Investopedia)

Margin Debit

Household Debt and Credit Report

Household Debt and Credit Report

The S&P 500 Historical Price Valuation Indicator

The 10 Year Treasury Bond Rate Valuation Indicator

The above chart shows the current 10 Year Treasury Bond Yield of  2.16%, though it has increased from July 2016 low of 1.50%.
The Federal Reserve Central Bank has been raising interest rates and yet the yield is still close to  it's lows as compared to the mean of 4.58%.
Gold to Monetary Base Ratio

The chart below shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. The monetary base roughly matches the size of the Federal Reserve balance sheet, which indicates the level of new money creation required to prevent debt deflation. Previous gold bull markets ended when this ratio crossed over the 4.8 level.

Gold historical is undervalued compared to how much money has been created.


Gold to USA Inflation Rate

The chart below shows the ratio of the gold price to the expected inflation rate. When the expected inflation rate go down in yield, normally the gold price goes up.The breakeven inflation rate represents a measure of expected inflation derived from 10-Year Treasury Constant Maturity Securities ( Bond ).

The Charts above show that most asset classes are overvalued.
Investing Matters believes that precious metals are the only asset class that are undervalued, in relation to the amount of money created by Central Banks.