Ned Davis: wary of high valuations

The US stock-market has continued to do well in recent months, despite high valuations, but contrarian investor Ned Davis of Ned Davis Research is wary.

The US stock-market has continued to do well in recent months, despite high valuations, but contrarian investor Ned Davis of Ned Davis Research is wary. While he agrees that we are not currently in "as big a bubble as 1929 or 2000", he does think that "if you look at any other market top you'd have to say we are in the very late innings".

Another warning sign is that "we've got debt at a very high level". This is a hurdle both financially and psychologically for the market, because when debt gets to excessive levels, "there's repayments, there's debt service, there's lower credit scores and also people just feel trapped". Davis also fears that passive investing has grown "overly popular".

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