Tech Stocks Look Overvalued, but Not Absurdly So

Updated Oct 23, 2023, 2:48 am EDT / Original Oct 20, 2023, 3:51 pm EDT

Stocks haven’t looked this overpriced in 20 years, one Wall Street economist wrote this past week. He cites the 10-year Treasury yield, recently up to about 5%, compared with the “earnings yield” of the S&P 500 index, or the price/earnings ratio flipped upside down, which is also near 5%. As finance poindexters say, has the equity risk premium collapsed to zero? That roughly translates to: Why take a chance on risky stocks when safe bonds seem similarly priced?

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