The old investment adage is, “sell in May and go away,” but this year, investors just seem to have done the latter — the S&P 500 has moved all of 0.2% higher during the fifth month of the year. So it’s a good time to step back and look at the bigger picture for stocks.
At the end of April, the S&P 500 SPX, -0.21% traded at a cyclically adjusted price-earnings ratio of 37, a level not seen since the dot-com bubble of 1998, and the Nasdaq Composite COMP, -0.03% was at an even more-staggering 55. And he doesn’t agree that the valuations are justified by low bond yields. “Low real yields have historically typically implied rather low multiples, since low yields point to a slow-growth environment and a higher risk of recession,” says Hofrichter.
So with all these bubble signs, isn’t it a time to sell? “History has shown that bubbles only burst once central banks start to hike rates or take other steps to rein in their ‘easy money’ policies.” Until the Fed starts tapering its bond purchases, “we think there is a reasonable chance that U.S. equities will continue bubbling up further. As a result, we stay nervously ‘risk on’ for now, gravitating towards risk assets.
The chief executives of Wall Street banks — including Bank of America BAC, -1.45%, Goldman Sachs GS, -1.03% and JPMorgan Chase JPM, -1.03% — will testify in front of the Senate Banking Committee on the topic of oversight.Retailers Dick’s Sporting Goods DKS, -1.20% and Abercrombie & Fitch ANF, +1.09% report results, and after the close, graphics chip maker Nvidia NVDA, +0.23%, database software maker Snowflake SNOW, -1.69% and identity management company Okta OKTA, +0.
Unloading in premarket.
I traded exclusively what suggested, that's why I'm in the pauper house.
Really, bubbles getting bigger💥