What bubble? We are still buying US stocks: UBS

by | November 26, 2013

Originally written by Leslie Shaffer at CNBC | November 26, 2013

While many analysts fear that quantitative easing is blowing a bubble in U.S. stocks, UBS is increasing its allocation, citing earnings expectations.

“While there are some concerns, ultimately, long-term investors should only care whether sentiment has pushed valuations beyond reasonable levels,” said Alexander Friedman, the global chief investment officer for UBS wealth management, in a note. “In short, it has not: investors need not fear that we are in the midst of a dangerous bubble in risk assets.”

While share valuations based on price-to-earnings ratios and cyclically adjusted earnings yields have risen to fair to slightly high levels, earnings growth may drive price appreciation, he said. But Friedman added, investors shouldn’t expect a repeat of the more than 15 percent annualized returns seen over the last five years, with annual returns of 7-8 percent more likely. Continue Reading.

Filed Under: Economics

About the Author

Alex is the co-founder of Jackson Hole Economics, LLC, a private research organization which provides analysis of key topics in economics, politics, the environment and finance, and develops actionable ideas for how sustainable growth can be achieved.

Alex has two decades of experience growing and transforming organizations in the financial and non-profit industry. He served as CEO and CIO for a number of publicly listed financial services companies and also as the Chief Financial Officer of the Bill & Melinda Gates Foundation, where he managed a range of day-to-day operating functions, was a member of the management committee and created the program-related investments group.

Alex served as a White House Fellow in the Clinton Administration and as an assistant to the Secretary of Defense. He is a member of the Board of Directors of Franklin Resources, Inc., a member of the Council on Foreign Relations, Chair of the Advisory Board of Project Syndicate and a board member of the American Alpine Club. Alex also writes regularly for various news outlets and is the author of The Big Thing: Brave Bea and Babu's Bindi, both children's books.  He is an avid mountaineer and rock climber and led the first major climb to raise money for charity through an ascent of Mt. McKinley.

Friedman holds a JD from Columbia Law School, where he was a Harlan Fiske Stone Scholar, an MBA from Columbia Business School, and a BA from Princeton University.

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