Francois Sicart, founder and chairman of Tocqueville Asset Management, sees danger for stocks, as investors have grown overly comfortable with the market at these lofty levels.
The S&P 500 index and Dow Jones Industrial Average hit record highs yet again Friday, and the S&P 500 has tripled from its March 2009 low.
"Today, market valuations are not as overextended as they were at the peak of the dot-com bubble or before the sub-prime crisis," Sicart writes in a commentary. http://www.tocqueville.com/insights/certainty-not-same-precision
"But neither are they at levels that, in the past, preceded periods of high returns in the stock markets. Meanwhile, complacency generally reigns while the grains of sand are piling up politically, economically and financially."
So what happens when that kind of pile-up arises? "Eventually it takes only one grain to start an avalanche," Sicart warns.
The S&P 500 had a trailing price-earnings ratio of 19.36 Friday, up from 18.56 a year ago, according to Birinyi Associates.
Meanwhile, David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates, has a more positive view of stocks.
"No doubt equities will have an adjustment phase as the discount rate used to discount future profits moves higher over time," he writes in a commentary obtained by CNBC. http://www.cnbc.com/id/102016280
"But bear markets don't start until investors see the whites of the eyes of the recession, and that is still likely a few years away."
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