Blokland’s daily sketch

Blokland’s daily sketch

16-04-2021 | Daily sketch
Has valuation finally become a problem?
  • Jeroen Blokland
    Portfolio Manager
A trigger is often needed to rebalance valuation levels. But after the massive rally in equity markets over the last year or so, valuation itself could make investors a little anxious. For example, the equity risk premium has dropped to its lowest level since the global financial crisis. This is not just because US PE ratios are high, but also because the bond yield has risen sharply since August. The Bank of America argued recently that at these levels of equity risk premium, equity markets have started to struggle in the past. We should take into account, however, that the equity risk premium in other regions is still relatively high: one of the reasons we want to be overweight Europe and Japan for now.
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As a senior portfolio manager I use charts to illustrate financial issues every day. I tweet my favorites as @jsblokland and was named 'one of the 50 most important people for investors to follow in 2018' by MarketWatch.
Previous editions of the daily sketch can be found on my personal financial markets blog. All graphics provided are collected from Bloomberg data and public websites. They do not always reflect my personal opinion and may also not necessarily reflect the opinion of Robeco. Please cite all references or quote the original source if replicating content.

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