The value of the stock market has never been higher. Does that mean stocks are very expensive?
The market slouched sideways for more than a year while bonds soared in value. Might this make equities relatively cheap?
Getting a fix on stock-market valuation is both simple and mysterious. There are countless methods for calculating how shares are valued and sundry theories for what they "should" be worth. Valuation is such a malleable concept that we now simultaneously have professional investors calling stocks alternately a bubble and a bargain.
So here's an attempted run through the valuation maze, with a hope to emerge on the other side with a helpful perspective on what a buyer of stocks at today's prices is getting in return and might expect from the investment.