What does it mean that the stock market is overvalued?

I know commonly people say the stock market is "overvalued" and therefore is likely to go down because it's overpriced. My question is...overvalued relative to what? What is the basis for your conclusion? Is there some mathematical formula you can point to, or is this opinion commonly just a guess?<br><br>If you're saying the stock market is overvalued in comparison to past historical valuations, how do you explain the stock market always being able to sustainably go up over time despite the stock market in aggregate having higher valuations last year than it did the year before?<br><br>Finally, for anyone that predicted the stock market being "overvalued" last year and predicted it would go down because of this, did you predict that the S&P would go up a healthy 15-20% last year?<br><br>Asking for a friend.