Part 5/15:
Risks in Market Valuations and Overconcentration
Current valuations—such as very low dividend yields, high price-to-earnings ratios, and record-high price-to-sales multiples—suggest that the US stock market is overextended. Companies like Costco have seen their earnings multiples swell from around 25x to over 40x earnings in a decade, indicating how high valuations can detach from actual economic fundamentals.