This week’s chart comes to us from Ned Davis Research via this article on MarketWatch:

S&P Median P:S

What that bottom pane shows is that the median price to sales ratio for the S&P 500 is about 2.2. That is higher than in 2000, which was about as obvious a bubble as one is likely to ever see. But….there are big differences between the 2000 and 2016 markets. Back then, one could pretty easily avoid the overpriced parts of the market by just avoiding technology. Value investors did fine during the bear market of 2000-2002. Today the overvaluation is more diverse and diffuse and much harder to avoid. Many of the traditional “safe” stocks are also some of the most expensive in the market. Proctor and Gamble (3.06), Johnson & Johnson (4.49), General Mills (2.22), Paychex (6.85), Pepsi (2.35), McDonald’s (4.19) and ADP (3.5) are all in the S&P 500 and also in the top 10 holdings of the US Minimum Volatility Index ETF that has seen some of the largest inflows this year. Investors seeking safety are crowding into the most expensive part of the market. Probably not a recipe for long term success.

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