If your aim is to suggest US equities — which notched more new record highs on Monday, by the way — are historically expensive, there’s no shortage of evidence.

I should note that the same’s generally been true more or less all the time for the better part of… well, for the better part of what may as well be forever if you’re “young” on any common sense definition of the word.

That’s not to suggest US shares are a perpetual bubble, but it is to suggest that those determined to paint them as such haven’t had an especially difficult time doing so in quite a while with just a handful of exceptions.

As things stand today, headed into 2025, you don’t need to be any sort of permabear — i.e., an Albert Edwards type — to fret about valuations. Maybe this is another boy who cried wolf moment for legions of committed market skeptics maybe it isn’t, but as the chart below, from Albert’s colleague at SocGen Andrew Lapthorne, makes clear, we’re really — really — pushing the envelope by now.

That’s US equities broken down into valuation buckets (“bands”), and then arranged in a distribution. Things are out of whack, if readers will pardon the colloquialism.

“The excitement for US equities is pushing valuations to extremes, with the top 10 stocks by market cap trading at 30x forward earnings, and the distribution of stock valuations way beyond the average,” Lapthorne wrote Monday.

Note from the figure that around 35% of the market trades on a forward multiple between 25x and 50x. That’s double the quarter-century average share.

What accounts for that? Well, AI optimism, for one thing, and relatedly, a dearth of quality stocks abroad (“TINA”). But Lapthorne called attention to another contributing factor, illustrated below.

Investors are enjoying quite the income boost from the financial assets they own versus pre-pandemic norms.

“To what degree [stretched equity valuations are] fundamentally driven or just a function of booming investor cash flow looking for a home is a point of regular discussion,” Lapthorne said, adding that for 2025, markets continue to project a combination of rate cuts and double-digit corporate profit growth.

That conjuncture, he reminded investors, would be “a highly unusual mix.” Were it to materialize — i.e., if in fact the Fed’s able and willing to cut rates at a time when corporate profits are booming presumably as a result of a healthy US economy, it’d “be quite bullish,” Lapthorne went on. “But as this has never happened historically [it] appears to be somewhat unrealistic.”