There is nothing strange about the current valuations of the stock markets. Yields of just about every fixed-income security not exposed to stock-like risk is zero.
Global stock market indexes are at a P/E of ~20 - that means a yield/direct return on equity of 5%. This doesn't seem so unreasonable when there are no returns to be found anywhere else. The global economy is still making money, just not hand over fist. Assuming no further catastrophe and no permanent reduction in earnings, the stock market is still a good investment when looking at the returns you get from profitable companies every single day.
The risk premium is very low, yes. Rising returns in other places and an increase in the risk premium would cause a permanent loss when investing at these level, yes.
But you're getting a 5% return if you invest today, albeit exposed to a risk of this number falling. And what is the alternative? Let's say the P/E was at the historical average of 15. That's a yield of 6.5%. That seems unreasonably high to me when other investments yield zero, so of course market prices are going to be bid up until it falls to a more reasonable level. We should be happy that the global yield is still as high as 5%.
Either there will be a correction or a crash in the future, and things will return to normal, or this is just another indicator of a late post-industrial world where capital is very cheap. The third alternative is a global war and destruction of life and wealth on an absolutely tragic scale. That would put us back in known territory real fast.
I can easily imagine today's children hitting their twenties and complaining that the millennials pulled up the ladder, there is now nowhere to park their hard-earned money to make an investment income.
