4 The charts of the Federal Reserve Chairman Powell is a site on the “somewhat high -value” shares.

• Jerome Powell’s comments have led to high -stock reviews in the United States to a decline in the S&P 500 index this week.

• The percentage of Cape Schiller and other metrics shows that the Federal Reserve Chairman is right that the assessments are high.

• However, rich rams may not mean pain in front of investors if the profits remain strong.

Federal Reserve Chairman Jerome Powell He drew the attention of investors on Tuesday when he said that the American stock market was “somewhat high.”

Although it is never a good idea to hear the Federal Reserve Chair speaking in lower colors than polyets, Powell’s note should not be a surprise to investors. After all, it is right – at least for the largest part.

Through many measures, the securities market is historic. Take it from the Bank of America, which this week indicated that 19 out of 20 evaluation scale shows that the market is historically expensive, with four standards at its levels at all.

Let’s dive into some measures that show expensive stocks.

One of the most male and tracked metrics is the Shiller head, which measures the current price of the S&P 500 compared to an average profit of 10 years. This week, it has reached its highest level since the peak of the Dot-Com bubble.

High stock assessments can be a sign of long -term proceeds. the Cape Shiller ratio In particular, it has a high relationship with returns forward for a period of 10 years. When the assessments are high, profits are already priced in the future, which usually leads to a weak performance of stock prices.

The percentage of Cape Schiller is not perfect. One of its restrictions is that it measures the average profits for 10 years, it may be slow to reflect the current conditions and therefore it may not be a significant indication of future returns as is the case with belief. Yale Economist William Jojzman.

“Every note is moving forward for one year, and one month, so basically you have a lot of connection between one note and the other,” Jojamman told Business Insider earlier this month. “It is very difficult to be confident of the results of this analysis when you have interrelated returns for 10 years or even five years.”

Tom Isai, founder of Sevens Report, also noted that although Shiller PE is an impressive scale, it is not asput.

“When you are on the market, it does not matter what is happening in the past, this only matters to what he will do in the future,” Isai told Bi. “That is why people use the PE street exclusively.”