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The Value of Nothing: Capital versus Growth - American Affairs Journal

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Throughout 2021, U.S. stock market valuations have hovered near all‑time highs. In June, the unadjusted price-to-earnings (P/E) ratio of the S&P 500 index eclipsed the tech boom record of 2000. Many other asset classes have attained, or nearly attained, record valuations as well. Stratospheric valuations may be partially attributable to the unique circumstances surrounding Covid-19...

Fall 2021 / Volume V, Number 3 T hroughout 2021, U.S. stock market valuations have hovered near all‑time highs. In June, the unadjusted price-to-earnings (P/E) ratio of the S&P 500 index eclipsed the tech boom record of 2000. 1 Many other asset classes have attained, or nearly attained, record valuations as well. Stratospheric valuations may be partially attributable to the unique circumstances surrounding Covid-19, as depressed trailing earnings combined with optimism about a rebound can inflate simple valuation metrics. But valuations were already high before Covid. The cyclically adjusted P

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