Stocks are currently highly valued, with the S&P 500 surpassing Wall Street’s median estimates and nearing 2025 targets. However, these valuations are historically expensive when considering both simple and cyclically adjusted price-to-earnings ratios. Consequently, equities are becoming less appealing to investors compared to bonds
Goldman Sachs predicts an annualized nominal return of just 3% for the S&P 500 over the next decade, compared to 13% in the last decade and a long-term average of 11%.
While investors are not currently worried, these valuation concerns may impact the market when risk sentiment changes.
#EyeOnVolatility
