Why sharp rotations prove valuations are too stretched

Michael Ulrich on UK Growth

Breakdown of momentum in the UK market is a sign of how stretched valuations have become, warns F&C's mid-Michael Ulrich.

As we enter the fifth year of the current bull market it should not come as a surprise that finding high quality, well-run and well-capitalised companies at attractive valuations is becoming more challenging.  That is not to say the market as a whole is dangerously overvalued.  The UK market is trading around its long-term averages on a number of valuation metrics including forward P/E, Shiller P/E, price to book and free cash flow yield. Companies exposed to the UK economy will be benefiting from the strong GDP growth we are witnessing.  Forward-looking indicators, such as purchasing...