High valuations

As we approach November 2025, valuations in the US stock market remain uncomfortably high relative to their own history. No matter how you look at it—forward price-to-earnings, cyclically adjusted P/E, or price-to-book—the conclusion is the same. Even when excluding the ten largest stocks in the S&P 500, valuations remain close to the levels seen during the peak of the Internet bubble.

That said, valuation alone has historically been a poor timing tool. At ECP, our disciplined investment approach helps us steer clear of the most extreme excesses and focus instead on businesses trading at reasonable valuations. It is also worth noting that today’s leading companies generate substantial real earnings, continue to grow, and now benefit from a more accommodative Federal Reserve.