Ned Davis of Ned Davis Research told MarketWatch, “Median price/earnings and price/sales ratios higher than at peaks in 2000 and 2007 are clearly a concern.” The comment is based on data from the firm’s recent study, depicted in the graph below, that suggests particularly high overvaluation based on examining the median price/earnings and price/sales ratios of NYSE-listed stocks. The P/E ratio is 25.6, based on 12-month trailing earnings, and the P/S ratio is 2.16, both are significantly higher than at the peak of the bull market in October 2007 and the internet bubble in 2000. According to Davis, the current median P/E ratio is the highest it has ever been (except at the depths of the October 2002 and March 2009 bear markets when earnings were depressed). While low interest rates and low inflation may explain some of the ratio, Davis notes: “inflation and interest rates have been low and falling since mid-2014, and note the NYSE Composite is below where it was then, suggesting valuations are a headwind for stocks.”