Morningstar's Market Valuation Guage

In an earlier post, I had discussed the contrarian approach to equity research as used by Morningstar.com. There I had mentioned that their approach is to provide their estimate of a stock's intrinsic value, rather than provide target prices. This approach seems to be a pretty useful tool for value investors.

Based on its intrinsic value methodology, Morningstar also provides a market valuation guage, where the site tracks the level of the stock market (currently not available in India), based on the the estimate of the Stock market's intrinsic value.

The chart is available here:




Based on the above estimate, the US market is marginally overvalued as compared to Morningstar's estimate of Fair Value.