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Showing posts from September, 2020

Market Valuations in Danger Zone as Federal Reserve Pledges Afterburner

Updated 9/1/2020 Gabriel Private Alpha Fund (after fees) SP-500 (SP-500 ETF SPY) Eurekahedge 50 (50 largest hedge funds) Index AI (Artificial Intelligence) Hedge Fund Index Barclay Hedge Fund Index Hedge Fund Index Return since January 2020 (the inception of GPA Fund) 33.0% 9.5% -5.2% 2.7% 2.3% -0.6%     The United States stock market valuations are in a Danger Zone.  A formula of stock market valuations around the world indicates that United States markets are the second most overvalued in the world (after India).  Frankly our model forecasts negative one and two year S&P 500 returns if considering only market valuations.  However the Federal Reserve’s actions in March 2020 temper this bearish outlook.        In March the Federal Reserve (Fed) lowered the Federal Funds rate - the rate at which money is loaned to banks - to its present rate near 0% in order to fuel a stalling economy.  Lowering the Federal Fund rate fuels the economy because it lowers borrowing costs.  For examp