Looking at absolute valuations is a problematic affair: the real interest rate has declined for 500 years (https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018). When real yields decline stock valuations should go up. So looking at them vs gdp without adjust for interest rates does not work well.

Look at it this way: people have for hundreds of years accumulated financial wealth. This has particularly been the case since the 80s as the tax regime fundamentally changed in favor of companies and wealthy people. The wealthy don't hold much wealth in cash (say around 10% of their financial wealth) - they hold stocks and bonds instead.

As they accumulate more and more money due to income concentration they need to buy more assets. If the economy can't provide enough investment opportunity asset valuations will increase - which is another way of saying yields will decline.

You can look at relative valuations or at valuations relative to real interest rates. But spending too much time on absolute valuations just makes you miss out and generally feel miserable.

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