Business Insider executive editor Sara Silverstein speaks with Brian Levitt, the senior investment strategist at OppenheimerFunds, who says that he doesn’t think the stock market is particularly overvalued. He points out that US equities are still trading cheap when compared to bonds, and argues that people are still fearful of a bubble similar to the one seen in the late 1990s. He brushes off those concerns, saying that conditions are different this time around.

Following is a transcript of the video. This transcript has been lightly edited for length and clarity.

Sara Silverstein: One thing we’re always talking about here: Do you think the stock market is overvalued?

Brian Levitt: I don’t think the stock market is particularly overvalued. It’s clearly trading above the long-term average, but that doesn’t necessarily mean that the market is significantly overvalued.

A few points to make: First and foremost is US equities continue to trade cheap to bonds. You look at the earnings yield of stocks compared to the Treasury yield, it’s not clear that there’s an alternative to owning the equity market.

So yes, stocks are somewhat above their long-term average. That should be expected when the global economy is growing and policies accommodative. We’re nowhere that point of significant concern yet.What worries people is that they remember the late 1990s and they have this recency bias to believe that if stocks have been going up for this long, then we must be facing some sort of bubble. The reality is, if you look at the top 10 names of the NASDAQ stocks, in 1999 the median price-to-sales was over 20 times. Today that number on the top 10 names in Nasdaq, media price-to-sales is closer to five times. That’s one-fourth of the valuations that you had at the height of the tech bubble.

So yes, stocks are somewhat above their long-term average. That should be expected when the global economy is growing and policies accommodative. We’re nowhere that point of significant concern yet.

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