On Wednesday, January 22, Jamie Dimon, the CEO of JPMorgan Chase, expressed concerns about the overvaluation of the US stock market. Dimon stated that due to risks associated with deficit spending, inflation, and geopolitical turmoil, he is more cautious than others in the business community.
Speaking at the World Economic Forum in Davos, Switzerland, Dimon told CNBC’s Andrew Ross Sorkin, “By any measure, asset prices are a bit too high. They are in the top 10% or 15% of historical valuations.”
Dimon highlighted that the US stock market, in particular, is in the midst of a prolonged bull market. The S&P 500 saw consecutive annual gains of over 20% in 2023 and 2024, a first in 25 years. Last year, Dimon remarked that his company’s stock prices were expensive.
Dimon also pointed out on Wednesday that certain aspects of the bond market, such as sovereign debt, are at “historically high levels.”
According to The Wall Street Journal, the most reliable indicator for measuring stock market prices is the cyclically adjusted price-to-earnings ratio developed by Yale University economist Robert Shiller. This ratio can look back a decade and adjust for inflation. Based on this, the US stock market is 83% more expensive than when Bill Clinton was first inaugurated, 145% more expensive than when Barack Obama took office, and four times more expensive than when Ronald Reagan began his term. It is even one-third more expensive than when Trump began his first term.
Dimon has been issuing warnings about the US economy since 2022. In August 2024, he mentioned the continued risk of recession in the US economy, and in October the same year, he highlighted the increasing global risks. Despite the slowdown in inflation, he noted several key issues in the US economy, including massive fiscal deficits, infrastructure needs, trade realignments, and global remilitarization.
“I am indeed more cautious about many issues,” Dimon said on Wednesday. “I am a bit cautious about deficit spending; this is a global issue, not just a US problem. ‘Will inflation disappear?’ I’m not so sure.”
He also expressed concerns about escalating global conflicts, including the war in Ukraine, tensions in the Middle East, and the growing threat posed by China, stating, “It makes me very worried about how it will impact the world for the next 100 years.”
Later on Wednesday, Goldman Sachs CEO David Solomon also acknowledged the overvaluation of the stock market. He attributed this to the impact of artificial intelligence and Trump’s anticipated relaxation of regulatory measures on US companies.