We are living in an unprecedented interest rate and monetary policy period in time. Gold moved into a cyclical bull market environment in January and the trend remains bullish. (Please visit my Trade Signals post and scroll down to the gold chart). I like gold for up to 10% of a total portfolio structure.
Today let’s take a look at what the most recent equity market valuation data is telling us. We’ll look at one-to-three year, seven-year and 10-year forward time horizons.
You’ll find that U.S. equities are significantly overvalued. This continues to suggest caution and setting realistic expectations on stock market returns.
Being the quant junkie that I am, I’ve found a couple of really cool charts I believe you’ll find interesting. Do you follow Value Line? One of the charts looks at Value Line’s price targets for individual equities. Another looks at equity ownership as a percentage of total household net worth and it has an amazingly accurate record of telling us what the 10-year forward returns may likely be.
I hope you enjoy today’s piece. Grab that coffee. There are a lot of charts but the read is quick.
The current opinions and forecasts expressed herein are solely those of Steve Blumenthal and are subject to change. They do not represent the opinions of CMG. CMGs trading strategies are quantitative and may hold a position that at any given time does not reflect Steve’s forecasts. Steve’s opinions and forecasts may not actually come to pass. Information on this site should not be used as a recommendation to buy or sell any investment product or strategy.