Record Number of Fund Managers Say Stocks are Overvalued

A recent survey of fund managers by Bank of America Merrill Lynch shows that a record number of 78% respondents believe equities are overvalued following their rebound from the March low—the highest reading since the bank’s first such survey in 1998. This according to an article in Citywire. BoAML reports that the market rally, bolstered by government stimulus to fight the coronavirus-related economic fallout, has led investors to “move past ‘peak pessimism’ but any optimism… Read More

Small Cap Premium at Historic High

A recent article in Indexology Blog reports that, for the first half of 2018, small caps are outperforming large caps by the largest margin in eight years. In the past four months, it adds, the outperformance has reached 10.1%, “contributing to the 5th biggest realized small cap premium in the first half of any year in history.” Smaller cap stocks the article explains, “are less sensitive to international relations generally from the higher percentage of revenue… Read More

Rob Arnott Says U.S. Stock Valuations Are a Worry

Rob Arnott, founder and CEO of Research Affiliates, says investors should “avoid U.S. stocks and buy emerging market equities to outperform in the coming years,” according to a recent CNBC interview. Arnott was a pioneer in developing indexing strategies that weight portfolio holdings according to valuation measures rather than market capitalization (a strategy typically used by passive index funds) and therefore overweights undervalued companies and underweights overvalued companies. The article cites data on the Research… Read More

Grantham Says Higher Valuations Will Remain

“The market can stay irrational longer than the investor can stay solvent”, writes Jeremy Grantham in a recent Barron’s article. Grantham addresses the fact that, since 1996, the market mean PE ratio has risen by 65% to 75%. He covers various periods in history, respective rises and crashes, showing that while there are always oscillations they have settled at a much higher PE: He also notes that profit margins have grown by 30% and represent… Read More

Buffett Says Stocks are Relatively Cheap

Notwithstanding all of the buzz surrounding the “pricey” stock market, legendary investment guru Warren Buffett thinks it’s a still the best place to plant your money. This according to a recent Forbes article by Validea CEO John Reese. According to the article, Buffett believes “we’re not in a bubble territory or anything of the sort,” but Reese presents some opposing views including those of Nobel Laureate Robert Shiller. Describing Joel Greenblatt’s use of earnings yield… Read More