Overvaluation of U.S. Stocks Has Surpassed Level Before 1929 Crash
July 6th, 2026
Via: Telegraph:
The overvaluation of US stocks has now surpassed the level that brought the stock market crashing down in 1929. At a rating more than double that of their British and European counterparts, and the highest since the peak of the dotcom bubble, US equities are in for a hairy decade.
That is the finding of a major investment bank, and, ever the diligent companion to you, Questor will unpick what this means.
This column has written extensively on how to find subtle indications that markets are becoming bubbly, the methods best deployed to try to sort out the wheat from the chaff when it comes to initial public offerings (IPOs) and the importance of valuation when it comes to long-term investment returns.
This new analysis notes that the US S&P 500 stock index trades on 41 times earnings, based on Robert Shiller’s cyclically adjusted price-earnings (Cape) calculation. This is the highest valuation for US equities, using this tool, since the peak of the technology, media and telecoms (TMT) bubble of 2000 and exceeds the valuations reached at the highs of 1929 and 1901, both of which preceded seismic crashes.
The 41-times rating is also more than double the UK and European equivalent multiple, the widest gap ever seen.
