performance analysis

Is The Dow Really Overvalued? Historically, No

Sheridan Porter Blog

Does the Dow closing above 16,000 for the first time in November 2013 mean we are in a bubble? The data says no—despite November’s new record high, the DJIA is a valued well within its historical norms.
FEV Analytics measures the fundamental value (FEV) of various indices including the DJIA, and is able to determine its premium by computing the ratio between the market value of invested capital (MVIC) and the FEV.
Looking back at 20 years of data, we can see the Dow’s current premium is still climbing towards its historical median. As we all well know, the DJIA is but one indicator of “the market.”
Taking into account other indicators, where do you think the market—and the Dow—are headed?