Seeking Alpha has the article The Stock Market Doesn’t Have A Clue About Monetary Policy by  Christopher Mahoney .

The lead steers are laboring under the misconception that growth and stock prices have been artificially stimulated by “massive monetary stimulus” since 2008. Where did they get such an idea? Can’t they google FRED? The last time that we had sustained double-digit money growth was exactly thirty years ago, in 1983, following the Volcker Shock.

I’m going to repeat this until it finally sinks in: money growth since the crash has been quite low. M2 has grown at about 5%, while the broader aggregates have grown by much less. There has been no monetary stimulus; Fed policy has not been “extraordinarily accommodative” no matter how many times Bernanke uses those words. The linkage between the Fed’s balance sheet and the money supply is simply nonexistent. QE has been pushing on a string, resulting in a massive buildup of sterile excess reserves that have no impact on the money supply.

I have also been under the mis-conception that the stock price growth have been artificially stimulated by the fed.  I am trying to reconcile the view of this author with the view of Investment Quality Trends that says that the market is overvalued on the basis of historical dividend yields.

Perhaps the Fed stimulus did not increase the money supply, but it did lower bond interest.  The low bond interest did artificially drive investors toward the stock market instead of the bond market.  So the Fed stimulus may be responsible for overvalued stock prices, but not quite for the reasons some people assumed.

To put a finer point on the IQT analysis, I tell myself that the stock market dividend yield may not mean that the stock market is overvalued for the current level of interest rates.  However, in terms of what the interest rates will be when they revert to historical norms, then it is overvalued.  Other things  may change by the time that interest rates return to normal, so it is hard to predict stock market price trends based on them being overvalued now, in some sense.  For instance, dividends might grow faster than the rise of interest rates, so that the market price of stocks does not have to fall to get them out of being overvalued.  Or the dividends might not rise fast enough and prices will decline.  I just try not to believe in crystal balls when it comes to predicting the stock market.