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Investors Split on Whether Current Valuation Levels Are Too High

This week’s Sentiment Survey special question asked AAII members how comfortable they are with the current valuations of stocks. Approximately 44% of respondents say valuations are too high. Many of these respondents describe valuations as being high relative to historical measures or as being too high given the current political uncertainties. Conversely, 28% say they are comfortable with the current level of valuations, particularly because of earnings and economic growth. About 20% respondents describe stocks as being fairly valued or otherwise say they focus on the long-term.

Here is a sampling of the responses:

  • “Pretty full. Higher than average P/Es.”
  • “Comfortable. I’m expecting improving earnings and cash flow resulting from the tax law change and continuing moderate economic growth.”
  • “There is too much uncertainty coming from the White House for the given high valuation of stock prices.”
  • “Fully priced, but earnings have been good.”
  • “The market correction in February has resulted in better valuations of stocks.”
  • “I am fairly comfortable with current stock valuations, but am uncertain as to the market direction at this time.”

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