Stock Market Valuation Series Part 5: S&P 500 Mean Reversion Model

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https://www.currentmarketvaluation.com/

Videos Referenced:
Stock Market Valuation Video Series Part 1 Miltpl.com: https://youtu.be/y0BxSkpJotA
Stock Market Valuation Video Series Part 2 The Shiller PE Ratio: https://youtu.be/3VNCA89kWDo
Stock Market Valuation Series Video Part 3 The Yield Curve Model: https://youtu.be/5Vo9OfMuAss
Stock Market Valuation Series Video Part 4 Buffett Indicator Model: https://youtu.be/5Vo9OfMuAss
Is the Stock Market Getting Ready to Crash? https://youtu.be/F4VUuOBy4mc
S&P 500 P/E Ratio Valuation Update August 1, 2021: https://youtu.be/9f3JSj0EpUY
Mutual Funds: https://youtu.be/hRip-z93PI0
ETFs: https://youtu.be/N_Dk1yn-mxs
Moving Averages and Oscillators: https://youtu.be/ge0KiCIjpzE

Stock Market Valuation Series
Part 5
Tools can be used to determine if the stock market is:
Overvalued: Expensive
Undervalued: Cheap
Fairly Valued: Just about right
Mean Reversion
Mean reversion studies how far current prices have deviated above or below the average prices.
Deviations can last months, years or even decades.
Mean reversion is best used for long-term big picture analysis.
The S&P500 is currently 89%, or almost 2.5 standard deviations, above its historical mean.
This suggests the SPX is Strongly Overvalued.
Conclusion
The S&P 500 Mean Reversion Model posted by the Current Market Valuation website is Strongly Overvalued.
Other Stock Market Valuation measurements show that the S&P 500 is OVERVALUED.
No immediate action is necessarily warranted.
However, it is necessary to have a plan developed and in place in case the market environment changes.
If other measurement tools suggest a major change in trend (up to down) implementing a plan will be in order for:
Those who have only long positions (defensive).
Those who participate in short positions (offensive).