Making sense of an extremely expensive stock market – Business Insider

Business Insider CEO Henry Blodget discusses the stock market’s ascent to yet another set of new highs, and drills down on high valuations. He cites investment manager John Hussman, who points out that the market is now the most expensive of all time, and predicts a 60% loss in the S&P 500 before the end of the current cycle. Blodget contrasts that view with the one expressed by billionaire investor Warren Buffett this week, who said valuations make sense right now, because of how low interest rates are.

He then kicks the valuation discussion over to Business Insider executive editor Sara Silverstein, who argues that Hussman’s valuation case adjusts for the below average profit margin during the tech bubble which may not be fair. Blodget offers a rebuttal to that, highlighting a chart showing historically elevated levels in a measure of US market cap to GDP, and says that while this doesn’t signal an imminent downturn, one will come eventually. Silverstein responds by noting that being two years early in calling a market top makes you wrong. She stresses that timing is everything.

Silverstein walks through the Fidelity Chart of the Week, which shows that stock market breadth is the lowest since the election, which could be a signal of weakness.

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