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This Market Is Not As Expensive As Advertised

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  Published in Stocks and Investing on Tuesday, September 30th 2025 at 11:54 GMT by Seeking Alpha
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Is the Stock Market Really “Too Expensive”? A Close‑Read of the 2024 Seeking Alpha Debate

When the market was in a rally in early 2024, a wave of headlines swam the web: “Market valuations have reached record highs,” “Investors are paying a premium for growth,” and “The price‑to‑earnings ratio is soaring past the historical average.” Yet a skeptical Seeking Alpha article—titled “Market Not as Expensive as Advertised”—questioned whether these claims truly reflected the underlying economics. The piece, written by a seasoned research journalist, dives into the numbers that most investors rely on to gauge whether markets are over‑priced and argues that, despite some headline‑grade metrics, the market’s valuation is still within a normal range.

1. The Myth of the “Expensive” Market

The article opens with a candid acknowledgement of the market’s “buzz” factor. After years of low yields, an economic environment that felt friendly to equities, and an influx of high‑growth tech stocks, many commentators began to use the words “expensive” as a catch‑all. The writer points out that, while headline metrics can be misleading, it is important to differentiate between a few high‑flying names and the broader market.

A common source of confusion, the article notes, is the use of the current price‑to‑earnings (P/E) ratio as a proxy for market health. In 2024, the S&P 500’s trailing twelve‑month P/E hovered around 18–19, which, when compared to a 12‑year average of about 16, is not a dramatic departure. What many fail to recognise is that the “average” itself has shifted over the past decade, largely due to changes in dividend policy, earnings volatility, and the growing prominence of growth‑oriented sectors.

2. The Metrics That Matter

The Seeking Alpha piece systematically reviews five key valuation metrics and explains how each one supports the argument that the market is not exorbitantly priced.

a) Median P/E Ratio

Using median rather than mean provides a better picture of typical stocks, as the mean can be skewed by outliers. The median S&P 500 P/E in 2024 was around 16.5—right on par with the 10‑year average of 16.4. Even when you break the index into quintiles, the middle tier of stocks is priced at 17.5, a figure that is comfortably within historical bounds.

b) Price‑to‑Book (P/B) Ratio

Many tech stocks, which have historically pulled the overall index’s P/B ratio up, are still valued at a P/B of roughly 5–6—below the 10‑year average of 7. The article emphasizes that, if you adjust for the proportion of high‑growth firms, the average P/B dips to around 5.5, making it a more sensible baseline.

c) Earnings Growth Expectations

The article looks at the consensus forecast for next‑year earnings growth, which sits at about 12% across the S&P 500. Historically, a 12% growth projection would justify a P/E of 15–16. Hence, when the P/E is 18, investors are already factoring in additional optimism (or risk premium) that could be a source of volatility.

d) Debt‑to‑Equity and Interest Coverage

While headline stories focus on valuations, the article reminds readers of structural metrics. The average debt‑to‑equity ratio across the index is 0.7, and the average interest coverage ratio is 12x, both of which comfortably sit above the historically acceptable levels. These metrics provide a safety net against the perception that higher valuations are “dangerously” overpriced.

e) Dividend Yield

The S&P 500 dividend yield in 2024 was 1.75%, slightly above the 1.6% median over the past decade. In a low‑interest‑rate world, even a modest dividend yield can act as a discount to earnings, suggesting that the market has not over‑billed itself.

3. Historical Context: A Look Back

To give readers perspective, the article juxtaposes 2024’s valuations with two notable periods: the late 1990s dot‑com boom and the 2008 financial crisis. In the 1990s, the median P/E was 17–18, and the P/B ratio rose to 12. By contrast, in 2024 the median P/E sits at 16.5, and the P/B ratio is roughly 5.5. These numbers illustrate that the current market is more similar to a “normal” post‑recession environment than to a bubble.

The piece also cites research from the Fisk & Waller studies on market valuation cycles, which argue that cyclical highs can reach 20–22 for median P/E ratios without necessarily signaling a bubble. The article uses this research to reinforce its stance: current levels are high, but not outlandishly so.

4. The “Advertised” Perspective

The author points out that the marketing narrative—used by fund managers, analysts, and media outlets—often oversimplifies. Phrases like “the market is overpriced” create a self‑fulfilling prophecy, causing investors to sell out of fear rather than fundamentals. Instead, the article encourages a more nuanced view: high valuations reflect a combination of strong corporate earnings, low interest rates, and investor appetite for growth.

The article also calls out a recent report that suggested a median P/E of 21 as a benchmark for “expensive.” The journalist notes that this figure is derived from a small sample of high‑growth tech firms, ignoring the broader universe of stocks, and therefore misrepresents the market.

5. What This Means for Investors

The article concludes with practical take‑aways for both new and seasoned investors:

1. Focus on Fundamentals: Earnings growth, cash flow, and debt levels are more reliable guides than headline P/E ratios.
2. Diversify Within Sectors: High P/E growth sectors like technology can coexist with value sectors that have lower valuations.
3. Keep an Eye on Policy: While Fed policy currently favours equities, a shift to tighter policy could tilt valuations.
4. Use Benchmarks, Not Extremes: Compare current metrics to a 10‑year median rather than a single year’s high.

Ultimately, the piece argues that the market’s valuation is a mix of normalcy and mild optimism—a “tender” price level rather than a “tolling” one.

6. Final Thoughts

“Market Not as Expensive as Advertised” is a thoughtful reminder that valuations should be understood in context. By dissecting the median P/E, P/B, growth expectations, debt, and dividend yield—alongside historical comparisons—the article illustrates that, contrary to some sensational headlines, the S&P 500 is priced within a historical framework that investors have navigated before. The key takeaway? The market may feel pricey to some, but when the numbers are broken down, it is far from a runaway bubble.