Research Affiliates chief investment officer of multi-asset strategies, Jim Masturzo, joins Market Domination Overtime to discuss why investors should remain mindful of valuations in current markets (^DJI, ^IXIC, ^GSPC). Masturzo observes that amid growing investor optimism about technology and artificial intelligence (AI), “nobody cares about valuations anymore.” However, he emphasizes that “valuations still matter,” stating, “Don’t throw that baby out just because AI and tech are going to take over the world.” Addressing whether earnings growth can support elevated valuations, Masturzo points out, “We’ve seen over the last year the majority of earnings have come from the mega caps … and so what happens with the other 493?” He warns, “At some point, investors are going to stop wanting to pay 30-plus points for earnings,” highlighting the increased risk this creates in US markets. “What we normally see is valuations grid higher for many, many years, and then they fall like a rock,” Masturzo cautions, noting this represents the “biggest risk” and that investors should avoid being “wrong positioned” when such a correction occurs. To watch more expert insights and analysis on the latest market action,
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