Russell worries that investors are over-optimistic and gives four reasons why the S&P 500 might reverse

30th January 2013

Russell Investments global head of investment strategy Andrew Pease is worried that investors are becoming overly optimistic as the S&P 500 index reaches the firm’s target price for the year of 1,500 and has given four reasons why this might reverse.

He writes “Our bottom line is that we think equity markets are fully valued and a lot of the upside risks have now been priced in. Markets move in cycles and there are enough warning signs to suggest investors are becoming overly optimistic. Longer-term, we expect equities to outperform bonds, but for now we are cautious about chasing the current rally. We want to avoid the traps of buying and selling on market sentiment in an ongoing risk-on/risk-off environment.”

The firm has given its five reasons explaining why the market has run so hard, and four things that could cause a reversal which we have listed below. This is the link to the full conversation blog.

Why has the market run so hard?

What could cause a reversal?

 

 

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