More Than Half of Investors Uncomfortable With Current Overvaluation of Stocks

This week’s Sentiment Survey special question asked AAII members what their comfort level is with the current valuations of stocks and why. More than 50% of respondents describe themselves as uncomfortable with current valuations and believe that many stocks are overvalued. On the other hand, 38% of respondents say that they are somewhat comfortable to very comfortable with current stock valuations because the economy is performing well. Finally, 12% say that they are not sure of their comfort level because of ongoing turmoil, such as the trade war and the uncertainty of a resolution occurring in the near future.

Here is a sampling of the responses:

• “Many stocks are overpriced; most are fairly priced. It’s hard to find a stock that’s been overlooked by the market and therefore provide for a great investing opportunity.”
• “Current valuations are at the higher end of the price-earnings (P/E) ratio, but they are justified by a fairly healthy economy.”
• “In general, I’m cautious but comfortable. Of course, I feel some assets are overpriced and some are underpriced. But that is always the case.”
• “My comfort level with the current stock valuations is fairly low. However, I believe stocks will become more overvalued during the next six months.”
• “The current valuation is high and probably not sustainable, so I am standing pat on purchases and waiting to see where the market goes from here.”

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