The Stock Market Looks Awfully Expensive Since the Trump Rally

Neil Irwin: “A new president won’t take office for another month, but the financial markets’ early verdict on the Donald J. Trump era is in, and it is straightforward.”

“They are saying the Trump administration will be good for corporate profits, and hence the stock market is way up. (The Standard & Poor’s 500 is up 6 percent since Election Day). It will also mean higher interest rates and inflation over time. (The yield on 10-year Treasury bonds has risen to 2.6 percent from 1.85 percent in the same span.)”

“But the result of those two shifts should make anyone thinking of investing in the stock market nervous. You’d be counting on the profit-boosting elements of the Trump agenda being enacted and the profit-hampering possibilities not materializing. Another way to think about it: Putting money into the stock market right now means accepting less compensation for taking on risk than was available before Election Day.”

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