S&P 500 Is At A ‘Normalized’ CAPE Of 18.1, Not 25

In the debate about whether the US stock market is currently overvalued, analysts have any number of valuation metrics to choose from. Most of them give comparable results (expensive, but not a bubble), so it surprising to see Goldman Sachs argue that it the current multiple is just 18.1x compared to a historic average of 17.2x (for comparison, the S&P 500’s Shiller PE ratio is currently at 24.91x compared to a historic average of 16.52x).

“Normalized valuation looks less stretched than other metrics such as P/E, cyclically adjusted P/E, and...