You can find out about two investments that belong in your portfolio here. Getty Images/Dogan Kutukcu
Stock valuations are high, especially in the technology sector.
But there are still opportunities in this market, says fund manager Meb Faber.
This is a machine translation of an article by our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
With the S&P 500 hovering near its all-time highs, valuations are very high by historical standards.
To give two valuation metrics as examples: According to data from GuruFocus, this is price-earnings ratio of the index for the last 12 months of 25.7 above the median of 17.8 since 1971, and that Price to book value ratio of 4.3 is well above the median of 2.8 since 1999.
High valuations don’t mean much when it comes to determining short-term performance, but they usually mean that the market will deliver poor annualized returns over a longer period of time, say a decade.
However, the S&P 500’s overall valuation is influenced by some of the highest valued stocks on the market. An example of this is Nvidia, whose P/E ratio is over 100 after 12 months. This means there are still opportunities beneath the surface of the market.
The top fund manager relies on these stocks
Meb Faber of Cambria Investment Management highlighted one of the most attractive opportunities he currently sees in a recent note: The US Value Stock. Faber manages the Cambria Shareholder Yield ETF(SYLD), the loud Morningstar data has beaten 99 percent of comparable funds over the past ten years.