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Market Is Overbought And Overvalued, Says Top Strategist

With the S&P at 18-month highs and the Dow within striking distance of 11,000, a top strategist tells us to proceed with caution.

Pete Boockvar of Miller Tabak doesn’t love what he sees right now. “Don’t chase stocks right now,” he counsels. Not at 18-month highs.

He feels the market is overbought and overvalued.

What are investors missing?

Boockvar feels that government spending is what’s propping up the economy right now. And to make matters worse, by and large the stock market isn’t pricing it in.

“While government spending as a percentage of GDP has been around 20% since 1970, I thinks it jumps to about 25%,” he says. “And that higher government spending will put a cap on corporate growth rates.”

That suggests to Bookvar that the multiple on the S&P is too inflated.

"Should it be 15 times earnings in an economy that's more made up of government spending . I say no. Instead he says it should be more like 13 times or 12 times," he says.


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