Everyone from investment “experts” to the bloke down the pub will tell you this rebound in stocks is overdone. They have been saying the same thing for months. Yet equity markets surge ever higher. The S&P 500, for example, has rallied almost 60 per cent since its March low. In the UK, third-quarter performance has been the best since the FTSE index was put together 25 years ago. Many emerging markets have almost doubled.

What explains the continued strength? Certainly not fundamentals. Incorporating second-quarter earnings, the S&P 500 is now 35 per cent overvalued on a cyclically adjusted price/earnings ratio basis, according to Smithers & Co. Using a so-called “q” methodology that relates company stock prices to the replacement value of their assets, the US market is even more expensive. Emerging market valuations are off the charts.