The bad-news-is-good-news stock market
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The stock market is more overvalued than at almost any time in U.S. history
Today’s stock market isn’t rising on fundamentals or interest rates, but on something else.
“Once a bull market gets under way, and once you reach the point where everybody has made money no matter what system he or she followed,
a crowd is attracted into the game that is responding not to interest rates and profits but simply to the fact that it seems a mistake to be out of stocks. … Like Pavlov’s dog, these ‘investors’ learn that when the bell rings —
in this case, the one that opens the New York Stock Exchange at 9:30 a.m. — they get fed. Through this daily reinforcement, they become convinced that there is a God and that He wants them to get rich.”
This helps to explain how the stock market has become even more overvalued than it already was earlier this year. In fact, almost without exception, valuation indicators with good long-term records are more valued today than at almost every other time in U.S. history.
To be sure, valuation indicators have little predictive power over the shorter term.
Mark Hulbert MarketWatch 29 July 2025
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