Analysts Flag Dot-Com-Era Valuations and a Vanished Equity Risk Premium

Two pieces of market commentary circulating this week converge on a similar warning about valuation. One draws a direct comparison between current S&P 500 pricing and levels last seen before the dot-com bubble, noting a disconnect between the index hitting new highs even as the number of individual stocks hitting new lows rises. The other argues the equity risk premium — the extra compensation investors typically demand for holding stocks instead of safer bonds — has vanished, meaning stocks are no longer cheap relative to fixed income. Together, the two arguments suggest the market's recent record-setting run is happening on narrower and more expensive footing than the headline index level implies. That matters because a shrinking equity risk premium has historically coincided with periods where stocks become more sensitive to disappointing earnings or rising yields. What's unresolved is timing. Valuation warnings like these can run for years before a correction materializes, and neither piece points to an immediate trigger — only that the cushion that previously justified high prices is thinner than before.