Stock value: High, low or perfect?

NEW YORK – Are stock prices too high, too low, or right where they should be?

“Valuation is like beauty – it’s in the eye of the beholder,” said Ed Yardeni, chief investment strategist at Oak Associates.

Since stocks have traded nearly flat for most of the year, an observer could be forgiven for thinking the current prices must be correct.

But underneath the market’s placid surface, there’s stubborn disagreement about whether stocks are superb bargains or overblown.

“Wake up, equity market! I recommend 100 percent stocks,” Edward Keon, chief investment strategist and director of quantitative research at Prudential Equity Group, wrote in a research report Tuesday, arguing stocks look “very cheap” compared to bonds.

Not so, says James Stack, president of InvesTech Research in Whitefish, Mont. “From a historical perspective, stocks are approximately 20 percent overvalued.”

Who’s right? Who knows? What we see is how investors gauge valuations, deciding whether individual stocks – and the moment’s markets – are worth buying or selling.

If anyone had a magic model for valuing stocks, there would be no risk in the market. “There have been countless attempts to develop models to determine whether the market is overvalued or undervalued that have been off the mark, sometimes wide off the mark,” Yardeni said.