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Half of Investors Uncomfortable With Current Stock Valuation Levels

This week’s Sentiment Survey special question asked AAII members what their comfort level is with the current valuation of stocks. Slightly less than half of all respondents (49%) describe themselves as not being comfortable. Reasons are varied but include high valuations for growth [particularly Facebook, Amazon, Netflix and Google (FANG)] stocks, concerns about the economic cycle being at/past its peak, tariffs, politics, how current valuations compare to historical norms and a lack of room for upside/margin for error. Almost 25% of respondents describe themselves as being comfortable with valuations. These respondents primarily cite corporate earnings and economic growth as the reason why. About 5% say they are finding some stocks attractively valued, but not others (particularly the FANG stocks).

Here is a sampling of the responses:

  • “I feel like most stocks are at or near their peak. Some of the tech stocks are way overvalued!”
  • “I’m fine with it. Earnings are increasing significantly and there are no good alternatives to stocks.”
  • “Overall, they appear to be historically high.”
  • “Stocks are fully priced, especially if the economy slows.”
  • “Valuations are on the high side, but the current growth numbers seem to support it.”
  • “Comfortable with value stocks. Not comfortable with FANG stocks or tech in general.”

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