Market Chaos Is a Time for Attitude Adjustment
Despite equity markets hovering near all-time highs, many Wall Street firms are warning clients to prepare for a stock market shock—or at least a major pullback as we ride through the “Dog Days” of summer. For starters, the S&P 500 had a cyclically adjusted PE (CAPE) ratio of 37.8 at the end of July, well above the historical average of 21.2. A CAPE reading above 37 has only occurred about 5% of the time since 1957. When it does, the index on average has declined 3% to 14% over the next three years. I’ll let you decide if this means the market is overpriced.
Add aggressive tariffs, multiple wars, and aspending bill that will likely increase the government debt. When you combine these concerns with disappointing data about job…