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Half of Surveyed Investors Believe Valuations Too High

This week’s Sentiment Survey special question asked AAII members what their comfort level is with the current valuations of stocks. Slightly more than half of all respondents (51%) described valuations as being too high. Among the reasons cited were insufficient earnings growth to support the valuations, slow economic growth, and current valuations being higher than historical norms. Several respondents described themselves as “uncomfortable” and/or they thought that current monetary policy is inflating valuations. An additional 14% expressed concern about the market’s short-term direction. About 16% said stocks are fairly valued or said they are otherwise comfortable with valuations. Only 12% of respondents to this week’s special question described themselves as comfortable with current valuations or don’t think prevailing valuations will hinder stocks from rising. Uncertainty surrounding the election was mentioned by many respondents.

Here is a sampling of the responses:

  • “I think stocks are now fairly valued, but there is a very wide variation in P/E ratios.”
  • “Not comfortable at all. The stock indexes are too high based on fundamental valuations.”
  • “Expensive, but little alternatives for investment.”
  • “Cautious. Valuations are high and earnings are not keeping track with stock prices.”
  • “I think the election is the big elephant in the room.”

Want to weigh in? Take the survey yourself and see results online at http://www.aaii.com/sentimentsurvey.

If you want to become an effective manager of your own assets and achieve your financial goals, consider a risk-free 30-day Trial AAII Membership.

 

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