It seems like the geometric average is 7 for the last 10 years vs 10 percent in the past. So doesn’t this mean the market is undervalued since its been growing less than historic levels?[/quote]
Yes, but consider that GDP growth has been subpar for nearly a decade, around 2%. And yet as mentioned the market (dow) has soared (relative to gdp) during the same time period.[/quote]
That’s a valid point that the stock market should grow slower if gdp slows. I think historically the stock market grows at a rate higher than gdp though. Maybe PE ratio is the best way to determine if there is a stock bubble.
