but the point of a valuation metric is that one way or another they tend to revert to the mean. these levels are unsustainable. the question is how does it revert to the mean.
the obvious way is for prices to simply crash, but that's hardly the only way. they can come down slowly, or gdp can come up to close the gap.
the other "way out" is that maybe it doesn't revert to the mean, maybe things shift to a consistently higher corporate valuation level. this could be possible if public companies in the aggregate become more profitable than they have historically been. remember that the stock market isn't really a measure of the economy, it's a measure of corporate profitability among public companies. which is certainly highly correlated with gdp, but not absolutely so.
corporations have become more monopolistic and have been extracting rents to a greater degree than they had been in the past. in other words, corporate profits as a percent of gdp has increased, meaning that a higher valuation may be warranted.
some of it is just concentration. if the largest 5000 stocks represent a greater share of gdp than the largest 5000 did in the past, then sure, they justifies a higher valuation.
now, 70% over the historical average valuation? that, i can't say....
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