At present, investors are paying 22 times forward earnings to purchase stocks on the S&P 500, 50% higher than the 10-year average valuations across the index.
He added that current valuations were an example of “stock market failure” driven by millennials speculating in the stock market for the first time.
“They are buying bullish call options that expire inside two weeks. There was ($500 billion) of bullish call options bought in a four-week stretch by small retail traders,” Smead said.
“In ’99 it was $100 billion, in ’07, it was $100 billion