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Where are Markets at Extremes?

As bull markets age, divergences between different market sectors tend to intensify. A quick look across the global financial markets today reveals a number of extremes, including abnormally low interest rates, low volatility across asset classes, and tight credit spreads among others. In the chart, we outline the current readings relative to historical ranges for various valuation, volatility and credit spread measures. Some general conclusions from these readings that should influence portfolio biases include: large caps are cheap relative to small caps; investors should expect volatility to rise longer-term; stocks remain inexpensive relative to bonds; risks for junk bonds are high; and foreign stocks are cheap relative to those in the U.S.8.11.14

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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