Food for thought on an approach to value the stock market.
I dont know if I buy into the logic of valuing the market based on the underlying assets of the companies. This indicator shows a premium since the 1990’s, when the American economy was increasingly becoming a service economy. One would assume a service economy requires less physical assets than a manufacturing based economy. One test of the service economy theory would be to look at overall revenue per employee over the last 20 years. However, even if this metric is skewed by the shifting economy, it would be tough to argue the market is cheap at these levels.