DUBAI, May 1 - Saudi stocks slid 0.6 percent on Tuesday as concerns grew
about rich valuations for blue - chip stocks after the region's biggest stock market hit a more than a two - year high last week.
Not exact matches
There's no question that it today's
valuation — if you look at the S&P overall, forward PE's are
about 18.5, the long - term average is more like 15.5 — you could say that it looks a little bit
rich.
As I emphasized last week, even if we had no concern at all
about a second wave of credit strains, we would still be fully hedged here based on the present combination of
rich valuations, overbought conditions, overbullish sentiment, and hostile yield pressures.
Last month, at the MarketCounsel Summit in Miami, during a panel discussion
about advisory - firm
valuations,
Rich Gill of Wealth Partners Capital Group cited what might be 2018's most bankable theme in the financial advice space.
But given today's low interest rates (recently
about 2.3 % for 10 - year Treasuries) and relatively
rich stock
valuations (Yale finance professor Robert Shiller's cyclically adjusted P / E ratio for the stock market recently stood at 29.2 vs. an average of 16.7 since 1900), it would seem to strain credulity to expect anything close to the annualized returns of close to the annualized return of 10 % for stocks and 5 % for bonds over the past 90 years or so, let alone the dizzying gains the market has generated from its post-financial crisis lows.
An average bear market within a «secular» bear market period (a period generally
about 17 - 18 years, where
valuations begin at
rich levels and achieve progressively lower levels over the course of 3 - 4 separate bull - bear cycles) is
about 39 %, and wipes out
about 80 % of the preceding bull market advance.
The home page of my A
Rich Life blog contains a section called «People Are Talking» at which I set forth 105 comments from both big - name experts and ordinary investors
about the need to make the transition from the failed Buy - and - Hold model for understanding how stock investing works to
Valuation - Informed Indexing, the investing model of the future.
«Although equity
valuations do not appear to be
rich relative to Treasury yields, equity prices are vulnerable to rises in term premiums to more normal levels, especially if a reversion was not motivated by positive news
about economic growth,» the Fed said.
This suggests that NTRs may offer a better option for investors who are concerned
about rich public REIT
valuations that may overstate underlying asset value, especially now, when traded REIT prices are at historic highs and yields are near historic lows.