Tags: Mirhaydari | bubble | stocks | market

Money Manager Mirhaydari: 'Bubble of Enthusiasm' for Stocks Might Soon Be 'Popped'

By    |   Thursday, 19 February 2015 02:06 PM

You can add Anthony Mirhaydari, founder of Mirhaydari Capital Management, to the list of those warning that U.S. stocks might be overvalued.

"Nothing, it seems, can shake the faith investors have in this market. And that has me worried," he writes in an article for The Fiscal Times.

There is complacency about many developments, including Greece's debt crisis and low oil prices, Mirhaydari says. Signs of U.S. economic weakness also are arising, such as declines in retail sales and factory orders.

In addition, there wasn't much breadth in the S&P 500's rise to a record high Tuesday, he notes. "Basically, [the stock market rally has] been all about Apple. . . . Outside of Apple, the action has been more tepid," Mirhaydari argues.

All this signals danger, Mirhaydari cautions.

"With the market historically having a tough time in the second half of February, I think we could be in for a violent retest of recent lows, as the bubble of enthusiasm in stocks is popped by any number of these factors hitting home," he notes.

"Plan accordingly and resist the urge to top-tick this market."

Morgan Stanley analysts, led by equity strategist Adam Parker, don't share Mirhaydari's concern.

In a commentary obtained by MarketWatch, they say the S&P 500 index may climb 1,000 points by the end of 2018. The index hit a record 2,101.30 Tuesday.

"We continue to think that hubris and debt define the top of every cycle and that these are unlikely to become problems this year," Parker notes, according to MarketWatch.

He and his colleagues see room for inventories, merger activity and corporate spending to rise from below-average levels, thus boosting stocks.

In addition, "the dividend yield of the S&P 500 is well above nearly all government bonds, and payout ratios are quite low versus history," Parker explains. "This, combined with buybacks of more than 2 percent net of issuance for the S&P 500 this year, ought to be a strong positive for equities."

The S&P 500 dividend yield stood at 1.96 percent Friday, compared with 1.84 percent for seven-year Treasurys.

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You can add Anthony Mirhaydari, founder of Mirhaydari Capital Management, to the list of those warning that U.S. stocks might be overvalued.
Mirhaydari, bubble, stocks, market
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2015-06-19
Thursday, 19 February 2015 02:06 PM
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