The problem isn’t concentration ; it’s that it’s overvalued

The U.S. stock market has often been even more concentrated in the past.

In 1900, railroads accounted for 63% of total U.S. stock-market value

The problem isn’t that concentration is making the market top heavy; it’s that it’s making it overvalued.

The S&P 500 is trading at about 22 times

That’s far above its average, since 1990, of 16.4 times expected earnings

By just about every other measure stocks are within a whisker of multidecade highs

The more expensive stocks are today, the more you should temper your expectations that they will do well in the future.

Jason Zweig Wall Street Journal 7 February 2025

US stocks on average trade at 22 times earnings

Jason Zweig at Wall Street Journal.

Jason Zweig at this blogg.

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