, Columnist
Air Keeps Pumping Into the U.S. Valuation Balloon
At some point, people will ask why they’re paying so much for American stocks when they’re cheaper elsewhere.
How much further can price-earnings ratios expand?
Photographer: Keystone Features/Getty Images
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The year is ending on a bullish note, on the back of some news that should genuinely cause good cheer. But if we decompose the sources of growth in U.S. share prices, and in companies’ earnings per share, it soon grows apparent that a lot of the good news in 2019 had already been factored in. Decomposing soon deflates the bubble of optimism about further gains.