Goldman Sachs says stocks are over valued, not just the Magnificent Seven or tech stocks. In brief from a note:
equal-weight S&P 500 is now trading at 17 times forward earnings, 13% above Goldman’s estimate of fair value
GS draw out the implication that high valuations typically lead to weaker returns over the months ahead, but not yet:
Goldman says it typically takes four months after crossing the 10% overvalued threshold for the equal-weight index’s valuation to peak (the index passed that level in February)overvaluation persists for 10 months on average overvaluation eases as earnings improve, but in instances where the index has sold off, a downturn in economic growth has been the most obvious catalyst
This article was written by Eamonn Sheridan at www.forexlive.com.