The valuations of stock markets are at an all-time high, recent research by Schiller states that the Cape Schiller index at 30 has only been reached twice before and that coincided with massive subsequent drops in stock market values.
Not surprisingly we have re-iterated this to our clients, who have taken appropriate action.
Our review of strategy and opportunities for investing in 2018 will be issued shortly to our private clients.
There are still risks to investing at these high valuations but the latest advice that we have received is that there could be further acceleration in stock market values led by technological advances that may help this secular bull market further.
A secular market is a market driven by forces that could be in place for many years, causing the price of investments or asset class to rise or fall over a long period of time. In a secular bull market, strong investor sentiment drives prices higher, as there are more net buyers than sellers.
One of the factors that has “fuelled” the increase in stock markets globally has been the low price of oil. Oil’s price has been pitched at an artificially low price, as the Opec consortium led by the Saudi’s, have attempted wipe out the fracking energy industry in the USA. As their attempt has failed, oil prices are now headed northwards. How might this affect stock markets, well that depends how high the oil price goes.
We have taken steps to provide our clients with an early alert to any predictable fall back in markets.
Our review on markets for 2018 will provide some positive news for our clients to take change asset allocations and hopefully continue on their profitable way.