: In all of this discussion, you will note that I have not mentioned the Fed, and to those who are Fed-focused, it may seem like I am ignoring the elephant in the room. I have argued, for much of the last decade, that analysts and investors over estimate the effect that the Fed has on markets. To the counter that it is low interest rates that are keeping the index level high, my response is that low interest rates cut both ways, first by lowering the discount rate (and thus increasing value) but also by signaling much lower growth in the long term (which I capture by lowering growth in perpetuity to the risk free rate). In fact, in my valuation spreadsheet, I offer the option of raising interest rates to what you may believe are more normal levels over time, and you can check out the effect on value, and dont be surprised if it is not as large as you expect it to be, since I also adjust growth rates and equity risk premiums to reflect changed rates. In fact, use the spreadsheet to and make your disagreements with me explicit, come up with your value for the index, and lets get a crowd valuation of the S&P 500 going. (It is a google shared spreadsheet, where you can enter your estimated value for the index).