With reference to my earlier write-up (click HERE) titled “Why am I cautious going into July…”, July was coincidentally the peak for S&P500. Hang Seng touched an intraday high of 29,008 on 4 Jul 2019 before slumping 4,108 points to an intraday low of 24,900 on 15 Aug 2019 (Hang Seng closed at 26,691 on 6 Sep 2019.) Personally, given the current market levels and information, I am not comfortable to raise my current percentage invested from 53% to significant levels (say >80%).

Why am I cautious in the market? Do read on…

Factors supporting my cautious basis

Above average valuations

Based on Bloomberg’s data on 5 Sep 2019, S&P500 trades at an average 19.5x current PE and 3.4x P/BV vs 10-year average 17.9x PE and 2.6x P/BV. In other words, it is trading at more than 1.5x standard deviation from its P/BV. Such valuations are not considered cheap,