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New leadership

Valuations for the U.S. stock market are on the rich side, both in historical terms and compared to other markets. However, expensive assets tend to maintain its status until something else becomes even more attractive and therefore, expensive or there is a market crisis, in which case a rotation occur. Notice on the chart, that the top 10 stocks of the S&P500 are almost 10 points richer than the index (where they are included as well) using 12 month forward earnings estimates, which are always generous at the beggining of the year, and then they’re watered down as we get to quarterly reporting periods. There needs to be a rotation from the #magnificent7 into other other stocks or other assets, as they are priced to perfection, but few, if any, seem to be ready to carry the load of the index, as these have been doing for the last year. We’re approaching prior maximums for the S&P500 and Nasdaq, and that resistance will be tough without new leadership.


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Source: Bespoke investment group



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