Ever wary of market risks, David Rosenberg of Gluskin Sheff highlights 4 signs of investor complacency as the equity market soars to new highs on a near daily basis:
- The Investor’s Intelligence Survey is flashing 52%, doubling in 6 months and at a two year high.
- Even the usually more dour AAII poll of individual investors shows a higher share of bulls than at any point in the last two years.
- Lipper reported that flows into equity funds have been a whopping $14.9B in the past three weeks, the largest for any such period since 2001.
- The S&P 500 has traded up to a 14X PE multiple (though it is likely higher than that since the double digit growth estimates for the second half of the year are ripe for cutting) is at the high end of this cycle’s range and at the level that touched off the interim peak last Spring (the market looks “fairly valued” because consensus EPS projections are for a 10.3% YoY profit surge in Q3 and +16.7% in Q4…with sales growth at 2-4% at best, these numbers will be next to impossible to attain without some massive cost-cutting).