Jamie Dimon sounded the alarm on stocks, saying the market looked ‘overpriced’.
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JPMorgan CEO Jamie Dimon has warned that stocks are overvalued.
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Dimon sees ongoing risks including inflation, government deficit spending and geopolitical tensions.
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Dimon’s comments echo a recent warning from Goldman Sachs that the market is “paid for perfection.”
JPMorgan CEO Jamie Dimon sounded the alarm on stocks today in an interview at the World Economic Forum in Davos, Switzerland, saying the market appears to be overpriced.
“Asset values are inflated by any measure,” Dimon told CNBC in Davos, adding that they are “within 10% or 15% of historical valuations.”
of S&P 500 It is less than 1% to hit a record high, and the bullish outlook is the hallmark of the current bull market rally that began in October 2022.
The S&P 500 is trading at a forward price-to-earnings multiple of 21.6x, above the five-year and 10-year averages of 19.7x and 18.2x, respectively.
Dimon said a lot of things have to go right for the stock market to continue its record.
“They’re high, and you need good results to justify those prices. Having growth strategies helps that happen, but there are negatives out there, and they can surprise you,” Dimon said.
Among the “negatives” that concern Dimon are a possible rebound in inflation, continued risks from government deficits and continued geopolitical risks.
“I’m a little concerned about the lack of funding. It’s not just an American issue, it’s an international issue,” he said. “And the related[question]’Will inflation go away?’ I’m not so sure.”
Dimon’s cautious comments follow The new Trump administration has unleashed that “animal spirits.” They helped spark a rally in the stock market.
Senior hedge fund investor Stanley Druckenmiller used the term in an interview with CNBC on Monday. In his 49-year career in Washington, D.C., from the anti-trade stance of the Biden administration to the pro-business stance of the Trump administration, he said, he has never seen such a face.
“We talk a lot with CEOs and companies on the ground, and I’d say CEOs are somewhere between relieved and smiling,” Druckenmiller said. “So we are believers in animal spirits.”
But Dimon isn’t the only one with a cautious view of the stock market.
A recent strategist note from Goldman Sachs suggested this The stock market is the “price of perfection”.
The bank said it sees the stock market as more vulnerable to a correction this year, particularly given its historically high valuations and concentration in a handful of stocks.