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View the article online at http://citywire.co.uk/wealth-manager/article/a722810

Is it time to trim US equities as valuations soar?

by Robert St George on Dec 09, 2013 at 14:28

The scope for improving margins further is even more pronounced in certain sectors. Industrials have operating margins at the moment of 14.3% compared with 16.7% in 2007, while in financials the present number is 24.9% against a high of 40.2% six years ago.

Shatney’s base case for 2014 has earnings per share growing by 8%, and she concludes that the S&P 500 therefore still offers 9% of upside. Even in her bear case earnings per share will increase by 5%, suggesting a potential upside of 6% next year.

For Shatney, then, the US is ‘a utopia for equity investors’.

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2 comments so far. Why not have your say?

Anthony O' Grady

Dec 09, 2013 at 20:21

All sounds uncomfortably consensual. Even Hugh Hendry has thrown in the towel.

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Whatever the weather

Dec 10, 2013 at 08:17

Stop comparing against long term averages and start comparing against the extremes?

When people start to tell you everything is OK because X is still 20% below the most extreme level we've ever seen in history you should probably start to get scared.

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