So that's one thing investors should take note of, the fact that we are two standard deviations above the mean, and if you believe in mean reverting markets, you should definitely look out for that. In some measures when we look at the median price-to-sales ratio, they are even higher than they were in 2000 or 2007. Those were crazy times, and looking at the S&P 500 valuations are quite similar. So Jordan, we're right next to March 2000 levels - which is the old tech bubble for some of us that were around trading and might be able to remember that. Since the beginning of the year, we've seen the set price-to-sales ratio in the S&P 500 move from about 2 towards about 2.2 now.
Also, no reset in valuations, which is what we're going to cover right here. That's pretty much getting close to the tie of record momentum stretch without any kind of a reset in sentiment and any kind of a reset in breadth - and to make the index at least short-term oversold. So the momentum is running really hot and the S&P 500 hasn't had an even 5 percent drawdown in 361 trading days as I'm making this podcast.
And the story reversed this year, so we got that correct and we profited handsomely from that however, the picture is now getting a little bit scarier for all assets.īasically, the all-country world index is up every single month this year from January until November - and basically, that's never happened since the inception of the index. Well, you correctly stated that yes, I have tilted a lot of my client's portfolios towards foreign stocks, in particular emerging markets, which have been depressed and moving sideways for quite a long time - while the S&P has been outperforming. I mean, that was the place to be in stocks, not in the S&P 500, but with where we are right now, talk about valuations and why you're more concerned right now than I guess you were at the beginning of the year. And because of the cheaper valuations, you have tilted portfolios to foreign and especially emerging markets, which have strongly outperformed this year. Now, coming into this year, Tiho, you noted that valuations were fairly high, yet the momentum of the market was still strong and that included foreign and emerging markets. Jordan: Okay, Tiho, so let's start with valuations. And finally, we should look at the market price and what's been happening in all of the assets, and sectors, across the board, and what they're telling us. We should look at what's happening in news and media, and track the current sentiment and mood of the investors. The four things I would like to discuss today, Jordan, is we should look at some valuations, which is very important so we know where we are in a cycle. It doesn't mean that you should go out and become ultra bearish, but there could be a more meaningful correction that will be playing on the cards over the coming weeks and months ahead, potentially as the Fed continues to unwind the balance sheet and hike interest rates.
That doesn't necessarily mean you should go out and short things. The bull market has been very strong and there are overpriced assets left, right, and center, and sentiment is buzzing with optimism. Basically, it's an important time to be cautious, in my opinion. Tiho Brkan: Hello to you, Jordan, and hello to all the listeners, and readers - if you are following the transcript. Okay, Tiho, so please give us an overview of what you'd like to cover in this episode. Tiho is going to provide observations and analysis on the US equity market, and why this is a time to be very cautious.
Something siliar to alpha zoo update#
In this episode, we are going to deviate from our normal structure, because Tiho has a very important update for our listeners and his followers. Thank you so much for joining us today for episode 7. Jordan: Hello everyone, and welcome back to the Atlas Investor Podcast, with Tiho Brkan.
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