One in Three Members Say Stocks Overvalued


This week’s Sentiment Survey special question asked AAII members about their comfort level with the current valuation of stocks. Nearly one in three respondents (32%) said they view stocks as still being overvalued, somewhat high or are otherwise not comfortable with prevailing valuations. Many of these respondents don’t think corporate earnings justify current valuations, while several others pointed to Robert Shiller’s cyclically adjusted price-earnings (CAPE) ratio, which is at 24.0.

Conversely, 26% said stocks are undervalued or that they are comfortable with current valuations. Many of these respondents think the current drop has created a good buying opportunity.

Approximately 10% said valuations are reasonable or otherwise okay, while 5% said their perception of valuations depends on the stock or sector. A small group of respondents (4%) simply said they are anxious or nervous about current market conditions.

Here is a sampling of the responses:

  • “Given how much stocks have dropped, it’s now time to buy.”
  • “Way overvalued relative to the historical norms for the CAPE ratio.”
  • “Depends on the stock. Some are still overvalued, while some are bargains.”
  • “I am waiting to add more stocks as I think this price level is still too high.”
  • “Too high given poor prospects for earnings growth.”
  • “I welcome the correction. Many great quality stocks are now on sale.”

Want to weigh in? Take the survey yourself and see results online at

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