With the Dow Jones Industrial Average (DJIA) hitting a record high this week, investors may be wondering if the markets are overvalued. The current world price-to-book value is 1.79 times, which is 17% below the ten-year average of 2.10 times, according to JP Morgan Securities.
Similarly, dividend yields are currently 2.58% while the ten-year average is 3.32%, JP Morgan also points out.
I never predict market directions, however, based on historical ten-year averages, it appears the equity market is still reasonably valued at current trading levels in my opinion.
So, even though the Dow Jones Industrial Average is hitting new high levels, the overall market book values and dividend payments seem to suggest these levels are rational and understandable.
