Any good value investor knows that it’s impossible to time the market.

Even Warren Buffett is always quick to say that he has no idea what the stock market is going to do tomorrow, let alone next year.

Still, good value investors also know that it’s important to know how healthy the economy is and whether or not investors’ sentiment matches up to that. Famous value investor Howard Marks of Oaktree Capital and author of the great value investing book The Most Important Thing calls this “taking the temperature of the market.”

One of the best resources for checking in on stock market and the economy is the J.P. Morgan Guide to the Markets, which is compiled every quarter and has a ton of great charts and data covering all aspects of the economy and various markets.

The J.P. Morgan Guide to the Markets for the 2nd quarter of 2017 was just released recently. Access a FREE copy of the Guide to the Markets for yourself below, and be sure to keep reading below the break to learn the 7 most important takeaways from the J.P. Morgan Guide to the Markets that I think you should know.

1. The S&P 500 is Still Overvalued As Valuations Continue to Climb

JPM Guide to the Markets 2Q17 1

Check out the chart above. Compared to its 25-year long term average, the S&P 500 looks to be just slightly overvalued in terms of Forward P/E, Shiller’s P/E, and P/CF. The current forward P/E ratio of 17.5x is up from 16.8x at the end of 2016.

2. Tech & Telecom Stocks Look Relatively Cheap, Energy & Utilities Look Expensive

JPM Guide to the Markets 2Q17 2

Comparing trailing and forward P/E ratios to their long-term historical averages, technology stocks, health care stocks, and telecom stocks appear to be the most undervalued… and energy and materials look way overvalued.

3. There Have Been 7 Major Pullbacks in the Stock Market Since 2010… But Investors Have Shaken Them All Off

JPM Guide to the Markets 2Q17 3

There have been numerous instances over the past 6 years where the stock market declined in response to various global economic and political events. Here they are:

  • July 2010: Flash Crash, BP oil spill, Europe/Greece (-16%)
  • October 2011: U.S. downgrade, Europe/periphery stress (-19%)
  • June 2012: Euro double dip recession concerns (-10%)
  • June 2013: Taper Tantrum (-6%)
  • October 2014: Global slowdown fears, Ebola (-7%)
  • August 2015: Global slowdown fears, China, Fed uncertainty (-12%)
  • February 2016: Oil, U.S. recession fears, China (-13%)

And yet the stock market has continued to climb…

4. We’re Now in the 3rd Longest Bull Market in History… But with the Slowest Financial Recovery

JPM Guide to the Markets 2Q17 4a

At 98 months (8.2 years!), this is now the 3rd longest bull market in history…

JPM Guide to the Markets 2Q17 4

…and yet the economic recovery has been by far the slowest.

5. Energy Firms are Out of the Red and Managing to Live with $50/bbl Oil

JPM Guide to the Markets 2Q17 5

Energy companies were in the black again for the second straight quarter in 4Q16. It seems that firms have rebalanced their budgets and are figuring out how to make money at $50/barrel versus the $100+/barrel prices that prevailed in 2011-2014.

JPM Guide to the Markets 2Q17 5b

And after significant overproduction in 2015 (and to a lesser extent 2016),the EIA is projecting stability this year, with 98.2 million barrels per day of oil produced and 98.2 million barrels per day consumed in 2017.

6. We’re at Full Employment… But the Labor Force Participation Rate is Still Down

JPM Guide to the Markets 2Q17 6

Unemployment continues to drop and wage growth continues to slowly tick up. Unemployment has dropped from the peak of 10.0% in October 2009 to 4.7% as of February 2017 (essentially full employment, accounting for workers who are naturally unemployed as the move, switch jobs, etc.). Wage growth has been hovering around 2.5%. However…

JPM Guide to the Markets 2Q17 6b

…the labor force participation rate has declined from 66% prior to the recession to 63% since late 2013. Most of this decline (2%) is due to people aging out of the workforce and retiring. However, the “Other” 1% is an unknown factor that cannot be explained by age or cyclical effects.

7. Active Managers Still Suck (For the Most Part)

JPM Guide to the Markets 2Q17 7

Practically everybody by now knows about the index fund revolution. Vanguard, which helped pioneer the index fund, is taking in $1 billion per day from investors. Still, it’s nice to see a chart that shows why. The gray line in the chart above shows the percentage of large cap equity managers that are able to outperform the S&P 500 (the green line). As you can see, the gray line only passes the green line occasionally – more often than not, active managers can’t beat the overall stock market (fewer than 30% of managers in each quarter since Q1 2014 have outperformed the overall stock market).

Want more charts? Check out the full J.P. Morgan Guide to the Markets for 2Q17. You can access the PDF below.