The current bull market’s backdrop of low volatility, high valuations, and tightening monetary policy are worrisome factors for some in the investment community, according to a recent article in The New York Times.
Jim Paulsen, a market strategist for the Leuthold Group, describes the above factors as “scary,” adding that most questions he hears from clients and audiences at speaking engagements relate to what he believes will finally trigger a major correction. “No one ever asks me when the S&P is going to blow past 3,000,” says Paulsen. The article also cites comments by UBS chief investment officer Mark Haefele, who says, “Investors have never felt less secure, even though we are eight years into a bull market.”
The article argues that the bull market has been driven, in large part, by sophisticated investors, adding that both institutions and high-net-worth investors are holding relatively low cash balances. “Many retail investors, though,” it adds, “have remained on the sidelines—a sharp contrast to the activity that preceded the bursting of previous bubbles.”
Despite the fact that the S&P 500 has quadrupled in value since March 2009 and October represented the 12th consecutive month that the index registered a positive return (the first time this has happened since 1935), the article says, “Rarely has a bull market been so unloved.”