The continuous new highs in the US stock market hide risks! Verdence Chief Investment Officer: Market pricing is "too perfect," increasing the risk of a correction

Zhitong
2025.07.28 01:21
portai
I'm PortAI, I can summarize articles.

Megan Horneman, Chief Investment Officer of Verdence Capital Advisors, warned of potential risks in the U.S. stock market, believing that investors are overly complacent about the U.S. trade tariffs on August 1, and that the market pricing is "too perfect." She mentioned that the uncertainty of Federal Reserve policies and the overbought technical situation could lead to a market valuation correction. Despite a cautious short-term outlook, Horneman remains optimistic about long-term investment opportunities, especially in international stocks. Trader Guy Adami also pointed out the risk of market bubbles. The S&P 500 and Nasdaq indices have recently reached all-time highs

According to the Zhitong Finance APP, despite the recent record highs in the US stock market, Megan Horneman, Chief Investment Officer of Verdence Capital Advisors, is concerned that potential troubles are looming. Megan Horneman believes that investors are overly complacent about the August 1 deadline for US trade tariffs, stating, "This market is currently pricing in a perfect scenario." In addition to tariff issues, she also cited the uncertainty of Federal Reserve policies and the overbought conditions appearing on the technical front as potential risks.

Megan Horneman, a former senior investment strategist at Deutsche Bank, pointed out, "If we see expectations for [interest rate cuts] being ruled out, while there is also uncertainty about how tariff issues will develop, then the market may experience some valuation correction." She is particularly worried that technical indicators suggest growth stocks (including large tech stocks) are in an overbought state, "These factors could disrupt the current rebound."

Despite her cautious stance in the short term, Megan Horneman considers herself a long-term bull and views market pullbacks as investment opportunities. She noted that international stocks are one of her top picks during market weakness. She stated, "I must remind you that while their valuation levels are somewhat high, they are still cheaper compared to the US stock market. They have been neglected for too long, and I believe you are now seeing funds starting to rotate. I think this trend will continue." To cope with the current uncertainty, her core advice to investors is to ensure that their asset allocation is appropriate.

Trader Guy Adami also expressed concerns, pointing out that the recent market rally has primarily been driven by retail investors. He stated, "In terms of valuation, the current market does seem a bit bubbly."

It is reported that the S&P 500 index set daily historical highs last week. As of last Friday's close, the index has risen 16% over the past three months, while the tech-heavy Nasdaq index has increased by 21% during the same period

Source: Zhitong The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.