We just crossed the midpoint of 2016. It is rather easy to state that equity valuations look overstretched. Analysts at Credit Suisse note that S&P 500 valuations stand at 1.49 standard deviations from the historical norm. “In the past, when this model has crossed the 1.5 standard deviation mark, the S&P 500 has fallen on a 12-month forward basis 58% of the time,” they wrote in a recent note to clients.
Not to be a pessimist when I am a trend follower… there are weak corporate profit growth, an ugly division going on in the US, polarized political landscape and economic strains in China and Japan. This can make for increased volatility with stocks.
“A market without support of strong earnings growth or cheap valuations is going to experience heightened volatility”
Comments
Log in or sign up to join the conversation.