Wednesday, March 23, 2011

Chart Store: Market Cap as a % of Nominal GDP

Prior to 1995 this measure of Stock Market Valuation had never been above 88% (this was right before the Crash of 1929). Since 1995 it has been over 100% the entire time with two brief movements below. The average is 62% - today it sits at about 125%, not an all time high (hit 180% in March of 2000), but still a number that should strike caution. Future returns from these levels do not look high.