I have taken several calls over the past week on the subject of the valuations in the US stock market. While I would agree that things look at little stretched, I would also point out, that in a vacuum perception can be molded to fit whatever narrative you are pinning your position on.
Nothing new, but I share with you the figure below (thanks to the folks at TD Asset Management for sending me the latest Andex chart). As you can see, the returns over a 30 year period from equity investments, far exceed those of the other asset classes.....but wait....there is more!!
What it also shows, is that a balanced approach to a portfolio, has the potential to drive double digit returns over time. So when you are asking yourself what to do about your crummy interest rate potential, on your bond portfolio right now, or the valuation risk to the US portion of your stock portfolio, remember this.....most financial plans target returns that hover around the 4-6% mark. If you can get 10% or so without all the stress that comes with the volatility of a 100% stock portfolio, it is probably worth your consideration. Just a thought.
See the attached PDF for the full Andex chart. Even better story is told there.