James Carthew: How I’m investing in an increasingly uncertain market
The S&P 500 is nearing an all-time high and several tech companies are eyeing mega IPOs, yet several risks could set markets crashing.
Three things are making me nervous about markets currently; valuations (especially in the US), the lack of a resolution to the Iran war, and the wave of very large, expensive-looking IPOs that are heading our way.
The S&P 500 is trading close to its all-time high and on about 22x this year’s earnings. Valuation multiples have been higher than this in the past but only at times that preceded market falls such the tech bubble and the distortion created by COVID.
The S&P sticks out, with Japan’s TOPIX index on about 17.8x, MSCI Europe on 16.2x, MSCI AC Asia Pacific on 13.4x, MSCI Emerging on 12.2x, and – bringing up the rear on this list – the FTSE All-Share at about 12x. How did we end up being rated like a below-average emerging market?
Many commentators have been pointing out the weird resilience of markets in the face of the Iran war. We may be on the brink of really acute shortages of oil and gas, fertiliser, sulphur, and naphtha. Cargoes that were at sea have now largely docked and unloaded, the stockpiles that were established for this possibility are dwindling, and governments that have tried to cushion the blow through subsidies must be wondering… read more here