Median Stock Valuations are Still Near a Record HighJune 05, 2014
Measuring the valuation level of the median stock in an index can help mitigate the market-cap-weighted bias associated with many index level valuation statistics. This is important because index level valuations that are heavily influenced by a handful of large companies can give a misleading representation of prevailing valuations for most stocks.
In the below charts we show the median valuation for stocks in the MSCI World Index (red line, right axis) and compare it to the Index price (blue line, left axis). Of note is that the median stock is trading at valuation levels only seen at the previous stock market highs of 2007 and 2000.