Q: Hi Peter and 5i Team,
Recently, Noah Solomon has had several articles in the Financial Post in which he describes the inherent dangers of the S&P 500 due to its high valuation, warning signals from the CAPE ratio, etc. (I’m using VFV as a typical ETF).
What is your assessment of his views? What strategies might a retail investor employ if there’s validity to his thesis?
Thanks as always for your insight.
Recently, Noah Solomon has had several articles in the Financial Post in which he describes the inherent dangers of the S&P 500 due to its high valuation, warning signals from the CAPE ratio, etc. (I’m using VFV as a typical ETF).
What is your assessment of his views? What strategies might a retail investor employ if there’s validity to his thesis?
Thanks as always for your insight.
5i Research Answer:
Every single trade, of course, has an opposing view. The S&P today is 24X earnings. High historically but certainly not at obscene levels. Rates are falling and corporate profits are set to rise again this year. There is more than $7 trillion in cash on the sidelines and the US is entering a period which will likely see less regulation, cost-cutting at governments and more business-friendly conditions. We could certainly see a correction and maybe one is happening now. But we do not believe we are in for a meltdown scenario.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV.