BNN Bloomberg

Ross Healy, chairman of Strategic Analysis Corporation and portfolio manager at MacNicol & Associates Asset Management
Focus: North American large caps


We’re now in a period of rising market stress as valuations reach into the stratosphere in some areas, including the FANGs and many of the stocks with major buyback programs, but the press of financial easing and ultra-low interest rates makes the scramble for yield intense. The paradox of today is that bonds are being bought for capital gains and stocks for income. Our own mathematics tells us that the S&P 500 has a cap at roughly 3,140 basis points (its fair market value level as we measure it), which has never been breached in the past 35 years. The problem right now is central bank actions have never distorted markets so much in all of history. We’re relying on signals and valuations whose expected value in current forecasting is based in historical readings from previous eras without those distortions. We can’t – and don’t – know if they are still reliable.

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