Tuesday, 19 September 2017

S&P 500 hits another record high despite overvaluation

Markets rose on Monday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.3 percent and the MSCI Asia Pacific ex-Japan index rose 1.1 percent.

While Monday's gain took the S&P 500 to another record high, Brad McMillan, chief investment officer at Commonwealth Financial Network, told CNBC that the stock market is way overvalued.

“The market probably would have to drop somewhere between 30 and 40 percent to get to fair value, based on historical standards,” said McMillan.

However, McMillan does not think a pull-back is imminent.

“Right now, a recession is a good ways away. And that's the engine for bear markets,” said McMillan.

On the other hand, CNBC noted that the S&P 500 has traded lower 70 percent of the time during the last two weeks of September since 1980, suffering an average loss of 1.3 percent.

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