”If companies are in good health and profits are growing, soaring share prices may be justified.
But one method of assessing share values, the Shiller PE (Price to Earnings) ratio on average inflation-adjusted earnings from the previous 10 years, suggests that stocks are very expensive.
In the above chart this level is at its highest since the Dot Com bubble burst in 2000 and stock markets crashed.”
”Another measure of stock health, also suggests the picture may not be as rosy as soaring indices suggest.
Dividend cover for UK’s largest listed companies, a measure of how sustainable share payouts are, is at its lowest level since 2009, according to new analysis by The Share Centre.
The research shows companies have continued to increase dividends, keeping investors happy, but failed to grow profits at the bottom line.”