U.S. stocks bounced back to record highs on yesterday, as tech stocks recovered substantially after suffering a two-day dip. Moreover, most analysts are anticipating another rate hike with the Federal Reserve’s latest monetary policy decision due today. This reflects a favorable economic scenario in the U.S., which in turn induced the positive sentiment in the market.
However, a record number of investors are skeptical as they fear that the market is overvalued at present and doubt whether this momentum will continue in the long run. In fact, as per a survey of fund managers released by Bank of America Merrill Lynch – a net 44% of investors—believe equities are too expensive right now.
Now an overpriced stock market is something that all investors are afraid of. Historically, such overvalued markets have given rise to stock market bubbles that bankrupted thousands of unfortunate investors.
Moreover, a few investors are also skeptical about the Fed’s plan to start reducing its huge portfolio of bonds. Amid such uncertainty pertaining to long-term stability of the market, it is best to invest prudently.