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A report written by a team led by chief equity strategist David Kostin stated:
"The forward P/E multiple of the S&P 500 has risen by 80% since 2011 (to 18x) and now trades at the 89th percentile compared with the past 40 years while the typical stock is at the 99th percentile of historical valuation."
FactSet noted that the trailing 12-month P/E ratio for the market is 22.1, well above the 10-year average of 16.7.
Because of this high valuation, Goldman expects the S&P 500 to fall 3 percent to end the year at 2,400.
"Our economists forecast the Fed will raise the funds rate once more during 2017 and four additional times during 2018, above the level implied by the futures market," the note said. "Consequently, investors will likely need to rely on earnings growth rather than valuation expansion to generate any returns."
But Goldman is not alone in thinking that the market may be getting ahead of itself.
In Bank of America Merrill Lynch's April fund manager survey of global investors, a record 83 percent of fund managers said that U.S. stocks are overvalued.
Even the Federal Reserve has been discussing the elevated metrics. The Fed's March meeting minutes offered this insight:
"Broad U.S. equity price indexes increased over the intermeeting period, and some measures of valuations, such as price-to-earnings ratios, rose further above historical norms. … [S]ome participants viewed equity prices as quite high relative to standard valuations measures."