News & Insights

Investing Newsletter – Jan 2018

by Financial Alternatives on 2/8/2018

  • 2017 was an exceptional year for globally diversified investors.
  • The US Shiller CAPE 10 year PE ratio is reaching historic levels indicating that the US stock market may be overvalued.
  • Vanguard’s US fair-value CAPE measurement that adjusts for inflation and interest rates indicates a less overvalued US market.
  • International Developed and Emerging Market Shiller CAPE 10 year PE ratios are less elevated which may indicate higher future long term returns for these markets versus US markets.
  • Valuation measurements such as the Shiller CAPE 10 PE ratio tell us nothing about when to expect the next market correction or bear market.
  • Rational investors should expect lower returns in the foreseeable future.
  • After significant gains in 2017, investors should consider rebalancing their portfolios especially if they are concerned about elevated stock market valuations.

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Posts are general in nature and do not constitute the rendering of legal, investment, accounting or other professional advice.