The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Growth-free profits cast a pall over recovery hopes

Now that the military battle in Iraq is over, my sense is that equity markets want to go up. But I don't believe that this is the start of a new bull market. It is just the eye of the storm of the secular bear market. The bounce will eventually die down and the bear market will reassert itself. We have not seen the lows yet.

The market will ignore valuations for now. These remain stretched. I estimate the S&P500 to be selling on 18 to 19 times this year's earnings. On a multiple of dividends, US equities are absurdly expensive - and dividends count these days. I trust dividend multiples more than P/E ratios because the manifold definitions of profit floating around throw up too many conflicting messages. But the Nasdaq is outperforming the broader indices. That means two things are clear: the market wants to go up and it doesn't give a toss about valuations for now.

Geopolitics will look good for a while too.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to and analysis and receive expertly-curated updates direct to your inbox.


Already a user?

Login now


We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree