With stock markets setting record nominal highs, it’s worth paying attention to this chart from Antonio Fatas which shows that the price to earnings ratio of the current market is rather subdued.
Investment advice is for suckers, so I wouldn’t try to draw any conclusions about where markets are going from this but it is a great look at where markets have been. Even though economic growth was strong in the 1990s, the circa 2000 peak was also a peak of excessive enthusiasm about future growth. Stocks weren’t just going up, they were rising way faster than corporate profits. The circa 2007 peak was very different and reflected steady growth at a constant multiple. Prices were higher in 2007 than in 2004 because the economy and profits had grown. The bull market of the past several years has been simlar to that, except grounded at a more pessimistic level.