Tags: BlackRock | Koesterich | financial markets | crash

BlackRock's Koesterich: Financial Markets Aren't 'About to Crash'

By    |   Friday, 19 September 2014 07:03 AM

Major stock indices hit record highs yet again Thursday, raising fear among some participants that equities and other elevated financial assets are about to crash.

Russ Koesterich, BlackRock's chief investment strategist, doesn't share in the doom and gloom. "I don't think this suggests that stocks or, let's say high-yield [bonds], are about to crash," he told CNBC.

So you don't have to move all your savings to cash, Koesterich says. But value is hard to find, he points out.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000


"It does mean you have to be very selective. It does mean you should have more modest expectations for what your returns are going to look like over the next five or 10 years where valuation really matters."

Over the past 25 years, stocks haven't reached a top until the S&P 500's price-earnings ratio has exceeded 20. That gauge totaled 19.25 Friday, according to Birinyi Associates.

"That still leaves us somewhere in the sixth, seventh or eighth inning, but I don't think we're on the verge of a bear market, at least not a bear market that's caused by high valuations," Koesterich said.

Stocks are benefiting from the view that the Federal Reserve won't raise interest rates until mid-2015. The central bank issued its latest policy statement Wednesday.

"The market's still in Fed mode," Joe Bell, a senior equity analyst at Schaeffer’s Investment Research, told Bloomberg. "A majority of people are thinking July 2015 may be the rate increase, and the market’s responding positively to the idea that [hikes] aren’t coming any sooner."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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Major stock indices hit record highs yet again Thursday, raising fear among some participants that equities and other elevated financial assets are about to crash.
BlackRock, Koesterich, financial markets, crash
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2014-03-19
Friday, 19 September 2014 07:03 AM
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