Cautiousness towards the collapse of the US stock bubble, European stocks are not becoming a safe haven.

December 14, 2024, 7:47 AM GMT+9 (excerpt)

In recent weeks, there has been a growing sense of caution towards the high valuation of US stocks, and the market may be ripe for a correction. Investors may consider moving funds to relatively cheaper European stocks, but if US stocks plummet significantly, Europe may also be dragged down, so it may not be a safe refuge.
Valuations of US stocks are approaching their limits on nearly all measures. The price-to-earnings ratio (P/E ratio) based on the past 12 months' profits of the S&P 500 Composite Index is at 27.2 times, close to the 29.9 times seen at the peak of the dot-com bubble. Price-to-book value ratio (P/BV ratio) has already exceeded the 5.2 times at the beginning of 2000, reaching a record high of 5.3 times.
Valuations have been high for many months, but what should be noted now is the extreme bullish sentiment of US stock investors. According to the Federal Reserve Board's fund flow data, the proportion of stocks in US household financial assets (excluding real estate) is currently at 36.0%, significantly higher than the 31.6% in the spring of 2000.