The S&P 500 has posted an average 12-month return of nearly 13% following previous valuation warnings by Fed chairs dating back to 1996, according to data from JPMorgan Chase & Co. The bank also noted that US equities have typically outperformed international peers in the 12 months following those warnings.
Once again, a Federal Reserve chair has made note of elevated US stock-market valuations. And once again, investors are more or less ignoring it.
Perhaps for good reason: Not only have none of the past warnings led to immediate market corrections, they all tended to correspond with good periods in which to be bullish — at least in the near term.
