New York stock exchange (file photo). Shares are trading in US stocks at a level that is higher than it would cost to rebuild the companies.
Shares are trading in US stocks at a level that is higher than it would cost to rebuild the companies, prompting a fresh warning about how high prices are going.
The Tobin Q ratio compares the total market value of US corporate equities to the replacement cost of the underlying companies. A ratio above one indicates the market is paying more than it would cost to rebuild the companies.
The long-run average is 0.85 - it reached 1.47 in 2000 at the dot-com boom. It is now more than 2.1.
Pie Funds chief investment officer Mike Taylor said he would take the signal seriously, but would be cautious about drawing "too mechanical" a conclusion.
