Photographer: Michael Nagle / Bloomberg
Photographer: Michael Nagle / Bloomberg
The corners of the American capital universe show signs of foam, but this should not endanger the wider market, according to Goldman Sachs Group Inc.
High-growth stocks and large multiples “look frothy,” and the boom in specialty buying companies is one of many “signs of unsustainable excess” in the US stock market, strategists wrote on Friday, including David Kostin. The recent increase in trading volumes of shares with negative gains is also at an all-time high, they said.
However, the aggregate stock market index trades below historical valuations after taking into account Treasury, corporate credit and cash yields, strategies added.
“Market pockets have recently emerged to demonstrate investor behavior in line with a bubble-like sentiment,” the team wrote. “But these excesses pose a low systemic risk to the wider market, given their modest share market capitalization. ”
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Source: Bloomberg
Given that global equities are trading at record levels, investors are questioning the potential for future returns amid extensive valuations and signs of speculative behavior. The MSCI AC World index rose 74% from March last year, with the Nasdaq 100 rising sharply by more than 90%.
Goldman colleagues from Citigroup Inc. acknowledged that stocks around the world appear “increasingly frothy” in a separate note on Friday, but suggested that valuations continue to remain in previous “mega-bubble” periods and risk assets could continue to rise. .
“Eventually an adequate urine market will emerge, it always happens after a bloating,” wrote the Citi team, including Robert Buckland. “But markets could become more crowded at first.”
– With the assistance of Crystal Tse