Short read: Are U.S. Stocks Overvalued?

As Marcellus’ Global Compounders Portfolio which predominantly invests in the US markets completes two years and given the rally post the US elections, we get asked the question in the subject of this piece often. Ben Carlson helps answer the question. Using data, he makes the following three points:

“Stock prices are up a lot but fundamentals have kept pace. In fact, the stock market has actually gotten less expensive over the past couple of years because of earnings growth

It’s also important to point out that much of the valuation premium on the S&P 500 comes from the largest stocks

The good news for valuation-conscious investors is there is plenty of value outside of the mega-cap stocks. Valuations for small and mid cap stocks are still pretty cheap. They are far less expensive now than they were before the pandemic.”

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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.