Ripple Effect — June 26, 2025
With stocks within sight of new all-time highs, a danger we noted in the spring is back—markets are historically overvalued once again.
One measure of looking at the stock market is comparing its current valuation metrics to its historical average.
On an earnings basis, markets are now back to two times standard deviations over their average: The S&P 500 saw a short dip following Liberation Day in April… but is back to nosebleed valuations. (Source: Andrew Packer) Only 5% of the time, the stock market is more expensive than it is now.
With corporate earnings yet to reflect the impact of tariffs – and with many of those tariffs likely to come inching back in July – it may be time to take some profits off the table following the stock market’s stellar rebound.
This doesn’t mean the market can crater immediately overnight in another Liberation Day move, but it does mean easy money has been made, and it’s time to start packing up.
Panic now, avoid the rush.
~ Addison P.S.: One potential, if bizarre, catalyst? This headline from Zero Hedge says it all: Wall Street Panics As Socialist Set To Take Over New York, REITs Tumble At The Idiocy Of It All. Social media is already having a field day with Zohran Mamdami’s win in the New York mayoral primary. Here’s your president posting: As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three.  (Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
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