The stock market is overbought, but it still looks much more attractive than bonds, writes Goldman Sachs.
The stock market is now more overbought than it has ever been since the dot-com bubble in the late 1990s, but a number of indicators indicate that stocks are rarely as attractive as bonds, Goldman Sachs wrote. In their assessments, they point, in particular, to the forward P / E multiple (share price / earnings per share – approx. ProFinance.ru), as well as the fact that the risk premium included in the share price is close to record values.
In 12 months, the European stock market may continue to show outperformance relative to bonds, but the US stock market is likely to lag behind, the bank predicts.
In late July, Goldman Sachs wrote that stocks and bonds will generate below average returns over the medium term.