Hulbert: This Timing Model Says Bull Market Has Peaked

According to one dependable valuation model, writes Mark Hulbert in a recent article for MarketWatch, stocks are now more overvalued than they have been since 1969. The model Hulbert cites is based on Value Line’s Median Appreciation Potential (VLMAP), a number published weekly by Value Line, Inc. that represents the median of the projected valuations (in three to five years’ time) of 1,700 stocks monitored by the firm’s analysts. Hulbert says that a number of… Read More

Investors Betting on Record Stock Market Run

In two months, the stock market’s recovery from the financial crisis will reach nine years, according to a recent CNBC article. “To be aggressively optimistic on this stock market now is to bet that it can challenge the greatest bull market of all time—the 13-year run that ended in early 2000.” Elevated valuations are also showing that U.S. stocks are more richly valued than in any period except the late 1990’s, the article says, and… Read More

Bloomberg on Overbought Market

A recent Bloomberg article reports that in the first week of December, U.S. stocks reached their “most overbought level in more than two decades, according to the relative-strength index.” The technical indicator, it says, suggests an increased potential for a market pullback at a level above 70, adding that the same week closed with an RSI level “just below 82.”  

Big Investors are Bearish

Nearly seven out of ten investors say stocks are currently overvalued, according to a recent article in The Wall Street Journal. Citing data from Boston Consulting Group’s annual investor survey of 250 investors (with a collective $500 billion in assets), the article reports, “Big investors are heading into 2018 with the most bearish perspective on stocks since the great financial crisis.” The survey (conducted over two weeks starting in late October) revealed that most of the… Read More

Leon Cooperman Says Market Isn’t Overvalued Yet

In a recent interview with CNBC, Omega Advisors CEO Leon Cooperman characterized the stock market as “reasonably fully valued,” arguing that he is not yet seeing investor euphoria. According to CNBC, Cooperman said he evaluates stocks on a case-by-case basis, and argues that the economy is gaining momentum. He believes the tax bill makes sense and will mostly be a positive change for businesses. On the subject of bitcoin, Cooperman said he has no money… Read More

GMO: Don’t Blame Pricey Market Solely on Tech

A paper published last month by GMO argues that the market’s current elevated valuations should not be blamed solely on the technology sector. Still, it says the market is expensive “no matter how you cut it.” Here are some highlights; The paper provides data showing how the shift to “higher-multiple sectors” only accounts for a portion of today’s pricier market (P/E 10 is also known as the Shiller PE or cyclically adjusted price-earnings-ratio): GMO suggests… Read More

Does GMO’s Jeremy Grantham See a Bubble Coming?

GMO’s Jeremy Grantham says stocks and bonds will “fail to generate inflation-beating returns over the next seven years, but he doesn’t see an imminent crash in share prices,” according to a recent article in The Wall Street Journal. The article says that Grantham, who predicted bubbles in 2000 and 2007, argues that while current stock valuations are high, they are supported by healthy profit margins. Further, he believes that the Fed’s low interest rate policy… Read More

Cliff Asness Says Stocks and Bonds Will Return only 2%

At the 2nd annual Evidence-Based Investing Conference earlier this month, AQR’s Cliff Asness shared his view that the expensive financial markets will offer weaker returns going forward. This according to a recent CNBC article. According to the article, Asness predicts that investors with a “balanced portfolio of stocks and bonds will only generate 2 percent real annual returns,” but warned against betting against the market. He argues that strong evidence exists indicating that high CAPE… Read More

Are We Partying Like its 1999?

By Jack M. Forehand (@practicalquant) —  One of the most common comparisons I hear for the current state of the stock market is the bubble of the late 90s. With the market seemingly setting new highs every day, valuations stretched, and technology stocks leading the way, there appear to be many similarities on the surface. When you look deeper, however, there are also some clear differences. Given that the 90s rally ended on a bad… Read More

Hulbert: Small Cap Sector Shockingly Overvalued

In a recent MarketWatch article, Mark Hulbert reveals a revised calculation that the small-cap sector is currently valued at a whopping 78.7 times earnings. He writes, “the Russell 2000’s true P/E today is higher than it was at either the top of the internet bubble or the 2007 bull market peak.” Hulbert describes the calculation, which he credits to financial services firm INTL FCStone’s Vincent Deluard, who told him that nearly a third of the… Read More