April Newsletter | Is it a time to be alert but perhaps not alarmed? We are frequently asked whether or not we consider the share market to be expensive. In our opinion, equities continue to look reasonably priced in absolute terms and attractive relative to alternative asset classes. This is reflected in an ASX200 Index earnings yield premium over the cash rate near the highest level it has been over the last 15 years. On an absolute basis, the market is priced near the average of the valuation range over the last 15 years when you consider the EV to EBIT multiple. Looking at one of Warren Buffet’s favourites, the market capitalisation to Gross National Income ratio, the Australian market also appears to be in a historical range that could be considered normal. While there will no doubt be the occasional market retracement, we think it’s unlikely that we currently have the requisite conditions in place for a major market peak.