Is it time to move out of the US stock market? Consider bonds
Stock valuations are high, with a lot hanging on the performance of a handful of mega tech companies that have generated all the recent gains in the S&P 500 index.
Over the year to the end of August, the vast bulk of the 14 per cent capital gain made by the S&P 500 index came not from higher profits but from higher valuations
Rising share prices combined with weak profits mean that valuations are now close to the top of the historical range.
investors are paying more than 30 times the average of the past decade’s profits
This ratio is lower than the peak of 44.2, recorded at the end of 1999, when the dotcom
But it is not far from the 32.6 set in September 1929
With no havens in equities, consider bonds
Philip Coggan Financial Times 7 October 2023
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