The S&P 500 Seems Really Expensive, But Is It?

The video explores whether the US stock market is expensive, focusing on the influence of major companies like the Magnificent 7. It explains the concept of price to earnings (P/E) ratios and their historical significance in predicting market returns. The video highlights that while the Magnificent 7 have driven up market valuations, the rest of the market remains pricey. It also discusses the appeal of Treasury bills as an alternative investment, given their current yield advantage over stocks. The video concludes by warning of potential declines in stock valuations if investors shift to cash.

What relationship exists between stock prices and expected future returns?

Why might some investors prefer T-bills over stocks currently?