Argus

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Apr 02, 2026

Market Outlook

Bullish

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Short

Summary

We have different ways of looking at market valuations, and most suggest that stocks are reasonably valued, having pulled back from all-time highs on concerns over the Iran war. Our Stock-Bond Barometer asset-allocation model is indicating that the two major portfolio asset classes are near parity on valuation. The model goes back to 1960 and its output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model is a modest premium for stocks, of 0.18 sigma, with a standard deviation of 1.07. So stocks normally sell for a slight premium valuation compared to bonds, which has been the case since inflation -- and bond yields -- jumped in 2022.  The current valuation level is a 0.43 sigma premium for stocks, not a discount but easily within the normal range. Other valuation measures also show reasonable multiples for stocks. The current forward P/E ratio for the S&P 500 is about 20, within the normal range of 15-24. On price/book, it is no surprise that stocks are priced at the high end of the historical range of 5.5-1.8, given that tech stocks, which have low capital bases, are the biggest component of the market.  The current S&P 500 dividend yield of 1.12% is below the historical average of 2.9%, but the relative reading to the 10-year Treasury bond yield is 26% compared to the long-run average of 39% and the all-time low of 18% during 1999.  On price/sales, the current ratio of 3.3 is above the historical average of 1.8, but well be

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