We are basing our overall view by using the work of the Nobel Prize winner, prof. Shiller from Yale as a method for making an evaluation of the stock market.
Our findings are summarized in the following chart:
This illustration shows that from 1945 through 2000 the earning capacity of the corporations included in the S&P (e.g. the Price/Earning ratio) has always showed a premium price for earnings. During this period the stock market delivered good returns.
Starting with 2006 the worth of the S&P started exceeding the P/E ratio, with recent history (through Feb 2016) showing S&P exceeding the P/E by large amounts.
CONCLUSION: There is no question that by historical comparisons the current valuation of the S&P 500 is materially overvalued using Yale university criteria.