http://www.iijpm.com/jlevypdfs/JPM%20SP%2001%20Arnott.pdf is a link that discusses this issue in terms of the risk premium over bonds being zero or even negative (which I believe would have to be taken as being the same as over-valued). I believe that they are talking about the US market as a whole, rather than just the S/P500. However the difference between the two is not large.I don't know if they are correct or not, but I do view the extremely low dividends pay-outs as bringing additional risk to the equation. When payouts were more normally in the 3-4% range, if a stock's finanical condition remained unchanged (continued dividend payments) then this dividend yield has a moderating effect on just 'how low can it go'. That moderating effect is gone, IMHO. OTOH, I am seeing more and more of these doomsday reports. Historically the market has made its biggest gains about the time that 'everyone' began to feel that it had no future. I tend to be a pessimist on this one, however and am keeping my equity allocation under 50%. dave
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