Risk assets have been rising in price across the globe—from U.S. stocks to southern European bonds. That's making it hard for investors to find assets at reasonable prices.
"That is the investor's dilemma right now, looking for something that is cheap," David Donabedian, chief investment officer at Atlantic Trust Private Wealth Management, told
The Wall Street Journal.
The S&P 500 index has almost tripled from its March 2009 low and reached a record high of 2,001.95 Monday. It stood at 19.2 times trailing earnings Friday, up from 17.8 a year ago, according to Birinyi Associates.
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Meanwhile, the Barclays 10-20 Year U.S. Treasury index has returned 10.5 percent during the last year.
"It isn't good that so much is so pricey; it means anything you buy could decline in value," Journal columnist E.S. Browning wrote.
In Europe, the economies of Italy and Spain may have dropped in the tank. But their 10-year government bonds yield only 2.5 percent and 2.3 percent respectively, not far from the U.S. 10-year Treasury yield of 2.39 percent.
Some analysts worry that investors are becoming overly complacent.
"Asset prices are high, and investors are increasingly relaxed about the outlook for risk. This should be a warning signal for investors,"
Fisher Funds Director Frank Jasper said in an interview on his firm's website.
"Are we forecasting any imminent market collapse? No, it looks like the key ingredients of the current market environment — low interest rates and low but positive economic grow — are here to stay for a while."
But future returns are unlikely to match those of the past few years, Jasper noted.
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