Reinforcing that attitude have been views expressed recently by some professional market analysts and academics that stocks really are less risky than people have thought. One prominent professor has actually stated that stocks are less risky than government bonds, so a dollar of earnings should be worth more than a dollar of interest income. However, as well as stocks have done in most single years and over many decades, their returns have been very volatile. Those that stay the course with equities during the occasional bad periods make out very well, but the volatility of stock prices causes many investors to make foolish decisions, buying and selling at the wrong time and losing a lot of money in the process. So the variability of returns, and the fact that quite a few stocks produce large permanent losses, while U.S. Treasury bonds never do, certainly make stocks riskier than bonds.
Theories are fine, but investing is a real-world activity.
High stock valuations always contain the potential of near-term price risk. Most small company stocks have lagged way behind their larger brethren in recent years, making them cheap now, and there are a moderate number of good values among medium-sized and large companies. There'll be more someday. So this is a time to exercise strong valuation discipline and try to get on base, rather than swing for the fences. All information contained herein is for informational purposes and should not be construed as investment advice.