Is all the good news priced in?

The MSCI All Country World Index rallied to an all-time high last week, surpassing not just the level it reached on 8 May this year, but also its previous peak on 27 March, 2000. Is this new peak a sign that we are nearing the end of the current bull market? After all, with growth hitting a three-year low in the world’s largest economy, surely there’s little reason for euphoria in global markets?

That’s precisely the question asked by BCA Research, the international independent research outfit. In a recent report titled ‘Global Equities: Is all the good news priced in?’ it argues that “investors seem to be pricing in not just a soft landing for the US economy, but the Goldilocks scenario. This optimism can be observed through US equity market sentiment surveys, which have all surged in recent weeks”.

Incidentally, a Dresdner strategy note says that, along with the new highs for the market indices, the frequency with which the word ‘Goldilocks’ appears in the financial press has also reached its highest level ever since the word came into vogue in the mid-1990s to describe an ideal economic environment.

BCA Research points out that “from a contrarian perspective, it would be unsurprising to see a modest market correction in the near-term (which may already be underway). However, we doubt that there is room for much sustainable downside given historical sea-sonal patterns”.

Sourced from BusinessWorld India mag

Additional Readings:
Additional Reports:
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Parting Thought:
  • If you are a know-something investor, able to understand business economics and to find five to ten sensibily priced companies that possess important long-term competitive advantages, conventional diversification (broadly based active portfolios) makes no sense to you. – Warren Buffett
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One Response to Is all the good news priced in?

  1. multisubj yb says:

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