CIO Ideas: Have We Reached Peak Sentiment?

Should you be apprehensive a couple of excessive CAPE ratio?

A current article in Advisor Views highlighted how excessive CAPE ratios have traditionally resulted in low S&P 500 returns.

Chart Supply: https://go.astoriaadvisors.com/e/939763/pe-as-a-predictor-of-returns-1/c17525/1456001806?h=FzF4fHaPa0AKxwM7jliJ6EzoqMpPPbGzFh7BCjih5uc

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The Shiller PE ratio is one thing that’s fiercely debated within the funding group. My takeaway:

• Do not obsess over it however maintain it within the huge image.
• It is an incredible software to assess the state of affairs on the subject of valuations, however laborious to handle portfolios as it isn’t nice at timing.
• There are simpler valuation and threat administration strategies that higher serve for managing portfolios.
• The bigger concern that I’ve for markets is that we’ve doubtless reached peak sentiment.

What’s the catalyst to take markets increased when we’ve:

1. Full Valuations
2. Peak Sentiment
3. Allocations at all-time highs
4. Earnings progress & macro knowledge have skyrocketed off of the March 2020 lows

See the next tweets that I’ve despatched out in current weeks:

Finest,

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