Generally speaking, Tobin's q is the market value of an asset divided by the replacement value of an asset. While the devil can be in the details of accurately determining both the numerator and denominator, hopefully you can see that the higher the value of Tobin's q, the more expensive an asset is.
As such, Tobin's q represents one approach to securities valuation. Tobin's q for the broad stock market appears below.
What do current levels of Tobin's q suggest about the general value of stocks here--cheap, fair value, or expensive?
position in SPX
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