> ## Documentation Index > Fetch the complete documentation index at: https://docs.chicago.global/llms.txt > Use this file to discover all available pages before exploring further. # Valuation State > Understanding the Valuation State - the Quantum Score pillar that measures whether an asset is expensive or cheap The Valuation State is the pillar of the [Quantum Score](/glossary/quantum-score) that measures whether an asset is expensive or cheap, relative to its own history and relative to its peers. ## Beginner ### What It Means Price alone tells you nothing about value. This pillar asks the question every investor should ask before the others: given what this asset has traded at historically, and given what comparable assets trade at now, is today's price high or low? ### Example A stock market trading at valuations well below its own long-run norm and below comparable markets scores strongly on this pillar, a lot of pessimism is already in the price. The same market after a multi-year rerating, trading rich against both its history and its peers, scores weakly, much good news is already paid for. ### Why It Matters Relative valuation helps assess the expectations reflected in prices over longer investment horizons. Lower valuations can provide a margin of safety when supported by durable fundamentals; higher valuations require stronger outcomes to justify the price. *** ## Advanced ### How to Read It A strong Valuation State reading means the asset is priced attractively against its history and its alternatives; a weak reading means much good news is already in the price. ### Common Misreadings * **Treating cheapness as a buy signal**: cheap assets can stay cheap, and often deserve to be, a weak economy or deteriorating trend can justify the discount * **Treating richness as a sell signal**: expensive markets can keep rerating for years when fundamentals and sentiment support them * **Expecting short-horizon payoff**: valuation is a multi-year force; over weeks and months the other pillars dominate ### Reading It Against the Other Pillars Valuation rarely triggers a view on its own, in the reports it typically acts as an amplifier or a brake on what the other three pillars are saying. Cheap plus improving fundamentals plus a firming trend is the strongest combination; expensive plus euphoric [sentiment](/glossary/psychological-wavelength) is the most fragile. ### Related Terms The composite this pillar feeds The strategy built on this idea The sentiment pillar