I've heard a few times that the USA market is overpriced and the UK market is under priced, what does this really mean? how is the USA market measured to be classed as over priced?
Interesting question. It depends on what is meant by 'overpriced'. If it means that the USA stock market is likely to underperform the UK stock market over the next 6-12 months, there is some support for that in a recent Investopedia newsletter.
See an extract below:
Following a 100% rally in the S&P 500 from the lows of March 2020, individual investors are taking their feet off the accelerator as they anticipate muted returns for the rest of the year. In addition, many have pared back their risk appetites for stocks and cryptocurrencies.
Since 1900, the US stock market has outperformed the UK market by around 2% per annum,, and is likely to continue to do so. Although markets fluctuate, the long term view is that the US stock market will continue to outperform the UK stock market, If the US market is currently 'overpriced' it will probably correct itself before the end of the year.
