Has asset price inflation distorted equity valuations?

Equity valuations have been distorted by asset price inflation following QE, and the market is awash with the evidence, says BBH's Regina Lombardi.

Quantitative easing may have ended, and US GDP appears solid, but one of our primary concerns is financial asset price inflation may have outpaced underlying economic performance and capital creation, creating a valuation distortion in equities. Liquidity provisions by global central banks have been the major drivers of this distortion. In sustained equity market rallies, history has shown investors tend to chase returns and sacrifice safety in an attempt to obtain extra returns. Growth stock multiples Current manifestations of such behaviour are evident in growth stock multiple...