A 'much more severe' selloff looms for stocks, 1 chief investment officer warns
The coronavirus death toll continues to rise across the U.S., as do the number of job losses, with an increasing number of companies reporting on the deep damage the pandemic has already inflicted. Yet the stock market, despite its volatile stretches, continues to hold up relatively well. iframe.
“The depth and duration of this economic calamity are unknowable, but values don’t yet reflect it,” he told clients in a recent note. “S&P 500 valuations are 30-40% higher than seen at even the comparatively-shallow market low of 2002.” “If the median S&P 500 stock traded down to the average valuation seen at the last three bear market bottoms, it would have to decline another 46% from April 30th levels” he said. “If we play along and assume that valuations bottom at the ‘richest’ levels ever seen at a bear market low, there’s still 32% downside remaining in the median S&P 500 stock.”
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