Is the market overvalued?
We recognize that valuations could be a hurdle for the market going forward, but remember that there are also a lot of possible ways in which valuations could continue to improve even as the market goes higher.
This is why it’s so important to be open-minded about the market. Market trends are often different than anyone expects, and if you stayed out of the market for the past few years because you thought the market was overvalued, you missed out on some good gains.
As Chief Investment Officer Jason Browne explained on CNBC,“Earnings could surprise to the upside. We could see additional growth from a variety of factors. And we do have extraordinarily accommodative monetary policy globally and very low interest rates.”
Think about your goals and your investment choices
It’s also worth thinking about your choices. Even if stocks are overvalued, what are your other options? Many believe bonds are also overvalued after years of historically low interest rates, and if you stay in cash, you’re losing money to inflation.
“If you look at valuations in the context of where else can I invest my money, I think that there’s a reasonable argument to at least have a normal long-term allocation to equities,” Jason said. “And I think a lot of people are still pretty far away from that sort of long-term orientation. They’ve just been too defensive for too long.”
The takeaway here is that you invest in stocks because you want to grow your portfolio over time, because you’re trying to fund a comfortable and secure life in retirement or send your kids to a top college. And relative to other alternatives, stocks are fundamentally in a better position to offer the level of growth needed to fund these goals.
We’ve been helping investors grow their portfolios, fund their goals, and enjoy a comfortable retirement for nearly 50 years, and we can help you, too. Click here to set up a time to talk with one of our longtime investment advisors about your goals and concerns.