Even after the latest correction, stocks aren’t cheap

The stock market selloff that drove the S&P 500 SPX, +2.30% back into correction territory this fall has left the benchmark index just 2% higher on the year—a year in which earnings are forecast to grow a robust 22.4%, according to FactSet.

So with earnings soaring and prices flat, many investors understandably see the market as underpriced.

“Stocks are about 6% below our estimate of fair value,” Craig Callahan, founder and president of Icon Advisors told MarketWatch. Callahan argued that investors today are overreacting to perceived headwinds, like rising tariffs on U.S.-China trade, the effects of which cannot be predicted.

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