The Great Unwind?

By John Del Vecchio and Brad Lamensdorf

Households are loaded to the gills with stocks.

During the start of the COVID pandemic, millions of new brokerage accounts were opened.

New investors flooded the market.

As the chart below shows, household asset allocation to equities hit a 70-year high earlier this year.

Prior peaks have been met with recession and as well as a major ass-kicking in equity holdings.

The Great Unwind

This time, a healthy allocation to equities comes at a time of historically inflated valuations.

We like to look at the level of price-to-sales. While sales can be manipulated, it’s a bit cleaner than earnings due to more line items subject to shenanigans with earnings.

The price-to-sales ratio was popularized in the early 1980’s. Back then, it was nosebleed territory if a technology stock exceeded a price-to-sales of 3x.

Recently, the entire S&P 500 exceeded 3x!

The Great Unwind

These levels simply are not sustainable. There is nothing new under the sun.

Eventually, the excess allocation to equities coupled with absurd valuations measured by price-to-sales will be reconciled.

It’s not gonna be a fun experience.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad. You may book a call here.


Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.


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