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Are stock markets overvalued? Image

Are stock markets overvalued?

January 18, 2021

Stock market valuations are extremely elevated. That is a reality.


The question is whether these extreme valuations are justified based on economic fundamentals. We can also compare on a historical basis for a sense of perspective.


The Credit Suisse Investor Risk Appetite Graph below measures investor sentiment to determine whether the market is oversold due to investors panicking about future prospects or overstretched due to over exuberant investors.


The graph clearly shows that investor euphoria is at its second highest level since 1987 only exceeded by market sentiment prior to the 2000 dot com debacle. A number of stock market valuation measures support this view. The asset bubble ought to trigger alarm bells in the investment community as this rally is unsustainable and a painful correction awaits us.



If you are fearful that your financial assets are at risk don’t leave it until it’s too late. We are happy to provide a second opinion on your current investments – on a no obligation basis. What have you got to lose? Probably a lot if you remain fully invested. We provide wealth management for expats in Spain.



Please speak to an independent financial advisor about your investment plan. We can provide investment advice to you in Spain. Call us +44 207 998 0570 or e-mail enquiries@fwm.gi


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