Has value returned?

The market is priced around crisis levels in the absence of any real crisis.

Summary: The market is still about 6 to 10 per cent overvalued on a price-earnings ratio basis. But the price to book ratio shows that even in a non-crisis state, the amount investors are paying for net assets is the same as in a crisis. Comparing stocks and bonds shows stocks have been undervalued for some time.

Key take-out: The market currently looks bad but these measures show there is considerable value to be found.

Key beneficiaries: General investors. Category: Shares.

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