Current Valuation State of the Stock Market
The stock market is currently not clearly overvalued, but, according to experts and based on statistical indicators, is moving within a normal valuation range. This justifies further investment.
Important Indicators
The MSCI ACWI World Index has a price-to-earnings ratio (P/E) of 22 and a forward P/E of 18.6. These values lie within the historical average range, as the forward P/E typically fluctuates between 15 and 20, with a median over the last ten years of about 17.3. Additionally, the current price-to-book ratio (P/B) of 2.0 is slightly below the median of the past decade of 2.2.
The Swiss investment bank UBS predicts that the current bull market, which began two years ago, could possibly last several more years. Historical patterns show that such upward phases typically last about 6.6 years with annual returns of approximately +18%. Parallels to the bull market of 1987, driven by technological advancement, are also recognizable.
Despite market turbulence, major indices like the DAX closed in the first half of the year at new record highs, indicating a positive market sentiment.
Risks to Consider
However, there are points that investors should keep an eye on: The market situation is characterized by reduced liquidity, geopolitical uncertainties, and trade policy risks, particularly from the USA.
Some defensive sectors like healthcare or utilities continue to appear stable and not overvalued, while other sectors benefit from economic upswing.
Conclusion
The current classic valuation metrics show no clear overvaluations. Experts still recommend investing in stocks while considering a diversified strategy and individual risk profile. However, it is advisable to closely monitor the macroeconomic framework.