By one measure, U.S. stocks are more expensive than any time since World War II, says Jim Paulsen, chief investment strategist at Wells Capital Management.
That measure is the median price-earnings ratio for stocks traded on the New York Stock Exchange. It totals just more than 20, exceeding the levels of about 19 reached during bull markets in 2005, 1998 and 1962,
according to a Paulsen commentary obtained by CNBC.
"Today's valuation extreme is not limited only to a subset of stock market sectors but rather, is very widespread," he wrote.
"A concentrated valuation extreme tends to loudly announce itself whereas a broad-based valuation extreme seems more stealth and, therefore, perhaps more dangerous."
As for the S&P 500, its trailing price-earnings ratio totaled 19.37 last Friday, compared to 18.88 a year earlier, according to Birinyi Associates.
Paulsen told CNBC earlier this week that stocks will likely end the year little changed. "We have a more vulnerable market," he said.
"I'm not saying it won't go higher over the next few years. I think it's going to. But we have a market at 18 times earnings, sentiment is the calmest . . . it's ever been," Paulsen said.
The S&P 500 closed at 2,044.81 Friday, after ending 2014 at 2,058.90.
Meanwhile, Bill Miller, manager of the Legg Mason Opportunity Trust, warns that the stock market is unlikely to enjoy the same smooth sailing in 2015 that it did last year.
"We’re likely to get a lot more volatility than we’ve become used to,"
he told The New York Times. "Every time we get a correction or even close to it, everybody flips out. That’s more of an observation than a prediction."
Already, the S&P 500 has endured a correction of 3.2 percent this month, and the CBOE Volatility Index (VIX) has fluctuated from a gain of 10 percent so far this year to a decline of 14 percent.
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