Soaring equities are keeping some investors on the sidelines. They're either increasing cash positions or returning capital to investors.
Lock step: Since the announcement of QE3 last fall, there has been a nearly perfect (0.97) correlation between U.S. equity levels and the Federal Reserve's total assets. Markets continue to hit all-time highs despite the downward trend in net income growth among S&P 500 firms.
Overvalued? Some valuation metrics suggest U.S. equity markets have become frothy. At 1.59, the S&P 500 price-to-sales ratio is 14% higher than its daily average between Dec. 31, 1990 and Oct. 25, 2013. Morningstar's fair market value indicator also suggests that the market is slightly overvalued. It measures the price-to-fair value ratio for the median of all stocks rated by Morningstar.
Sources: Bloomberg LP, Morningstar Inc.
Compiled and designed by Timothy Pollard and Gregg A. Runburg