The Globe and Mail reports in its Tuesday, Feb.10, edition that the S&P/TSX Banks Index has rallied 59 per cent since North American markets bottomed on April 8. The Globe's Scott Barlow writes that the banks may now be at valuation levels that should give investors pause. The bank index is currently trading at a forward price-to-book value of two times, the highest of the past decade. Previously, a reading of 1.9 acted as a warning for investors, indicating periods of performance weakness and pullbacks. The last 1.9 price-to-book reading was in February, 2022, after which the index fell 28 per cent by October, 2023. It also reached 1.9 in January, 2018, with bank stock prices remaining stable before dropping 25 per cent at the pandemic's onset. Valuations were not the cause of this decline, but bank stocks could have provided more downside protection had they not been at such valuation extremes. Forward price-to-earnings ratios are also at extremes, above 15 times, although they offer less effective timing as an indicator. Mr. Barlow says valuations strongly imply that the sharp rally is close to an end and the odds of a temporary pullback are elevated.