Vanguard Warns: Markets Overvalued, Stock Returns Slumping
Vanguard, one of the world's largest asset managers, has issued warnings about overvalued markets and reduced expectations for stock returns. Meanwhile, the White House has proposed reforms for university admissions and classroom culture.
Vanguard's number two executive, Greg Davis, has cautioned that the US stock market's strong September performance, the best in 15 years, may not continue. He believes the market is 'priced for perfection' and likely to disappoint. The S&P 500's price-to-sales ratio reached an all-time high of 3.3 in September, indicating investors' enthusiasm for companies is outpacing that of their customers. Vanguard has also lowered its expectations for stock returns over the next decade to as little as 3.3%, worse than the return from a bucket of corporate bonds.
In other news, the White House has linked federal university funding to classroom culture reforms. These include mandatory standardized testing in admissions, a five-year tuition freeze, and a ban on the use of race in admissions and political statements by university employees. This comes as part of President Biden's push to make college more affordable and accessible.
Vanguard's warnings about overvalued markets and reduced stock returns highlight the need for investors to be cautious. Meanwhile, the White House's proposed reforms for university admissions and classroom culture aim to address affordability and accessibility issues in higher education.
