Nosebleed valuations
Been on the plane for the past day or so - from Europe to Perth - so just been chilling with the kids today, ahead of the AFL grand final in Melbourne next week.
I somehow expected there to be a bit of construction going on in WA, given the mega-housing-price-boom of the past half-decade or so...and yet, nothing much seems to have changed since last time I was here.
With so few foreign buyers in the market these days thanks to stamp duty surcharges, it seems that apartment developments - and therefore the supply response - remain fairly stymied so far in this housing cycle.
Not so much time for blogging today, so just a quick chart or two instead.
Here's the first one - the Shiller PE (CAPE) ratio has risen to above 40, the second most expensive level in history:
It's pretty amusing, actually, since only a few months ago back in April there were a lot of articles about the potential destruction arising from Trump's proposed tariffs and the end of US exceptionalism.
This is just one measure of stock market exuberance, granted, but there are plenty of others you can look at.
Here's the Price to Sales ratio, by way of a second example, which is trading at the highest level in history:
In short, after a blistering run, stock markets are trading at incredibly expensive levels.
John Hempton of Bronte Capital discussed how extreme the market exuberance is in a recent Partner Letter in June 2025
here.
And stock markets have shot almost straight upwards since then.
Strap in.
Back to sleeping off the jetlag - normal blogging services will resume forthwith...
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