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Vanguard Warns That Stock Valuations Are Getting Out Of Control
The CEO of one of the world’s largest asset managers just put out a warning to investors, noting that the Trump-fueled rally to new all-time highs is ignoring the massive risks associated with the new administration.
In a recent interview with Bloomberg, Tim Buckley warned that it might not take all that much to push stocks significantly lower:
It would take “very little to end up with a market correction because of higher valuations,” Tim Buckley, chief investment officer of Vanguard Group Inc., said in an interview at his company’s London office this week. “You are teetering from a height and it’s easy to lose your balance. It takes a little bit from the outside, and volatility returns to the market.”
Buckley’s company manages approximately $3.5 trillion, so it certainly pays to listen when he speaks.
“Right now it’s gotten ahead of itself,” he said, referring to the market’s recent run. “You could go from getting ahead of yourself to going on a sugar high if you continue down that path. It needs fundamentals to catch up.”
Right now, the S&P 500 is pricing in massive earnings growth over the next few years, and if companies can’t live up to those lofty expectations, stocks will need to come crashing back down to earth.
The SPDR S&P 500 ETF Trust (NYSE:SPY) rose $0.70 (+0.31%) in premarket trading Friday. Year-to-date, SPY has gained 1.90%.
