Are Stocks Cruising for a Bruising?

Most U.S. stocks are overvalued today. Throw in concerns about weakening global economic growth, and the market looks vulnerable.

Is the stock market too richly priced? I tend to be an optimist, but I’m beginning to think the answer is yes. Why? I’ve been reading a truly scary piece of research from Jim Paulsen, chief investment strategist at Wells Capital Management. Paulsen, a longtime stock market bull, finds that based on earnings over the previous 12 months, the average U.S. issue trades at a post-World War II high. His findings come at a time when world stock, bond, currency and commodity markets are being rocked by fears over anemic global growth.

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Steven Goldberg
Contributing Columnist, Kiplinger.com
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for Kiplinger.com and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or sgoldberg@kiplinger.com.