Stocks are historically and dangerously expensive. The chart below shows the spread between 10-year Treasury yield and the earnings yield on the S&P 500. The earnings yield is the inverse of the P/E ratio. You calculate it by dividing total earnings of the companies in the index by the total value of the index. 
Put another way, for every $100 you invest in the index, the companies in it are going to generate $3.29 in earnings at these levels. Historically, the average earnings yield is 4.69% (or $4.29 in earnings for every $100 invested). And right now, the yield on the ‘risk free’ 10-year US Treasury note is 4.41%. What does that mean?
It means the equity risk premium–the extra return you’re supposed to get above the ‘risk free’ rate for buying more volatile stocks–is actually NEGATIVE. You’re not getting any extra return for the risk you take in stocks. 
As you can see from the chart, there was a big divergence between the two yields in 2000. But back then the 10-year yield was 6.68% in January of 2000. The earnings yield on the S&P 500 hit a low of 2.17% in December of 2021. My point?
Yes, stocks could get even MORE expensive from here. But for stocks to go higher, it’s going to take one of two things. First, higher prices, which is just simple ‘multiple expansion’ and fear of missing out (FOMO). Or two, higher earnings. 


https://image.nostr.build/e5c58680477fd9c4f0db71777b91d3bd540f99bde6b636867b39e8a67f6c0ec0.jpg

Bonner Research