FX168 Financial News (North America) - Piper Sandler's report released this week pointed out that investors should not rush to sell stocks due to concerns about the stock market being overvalued.

Piper Sandler is an investment bank and financial services company headquartered in the USA. The investment portfolio strategy team of this Wall Street company, led by Chief Investment Strategist Michael Kantrowitz, estimates that the S&P 500 index is overvalued by about 8%. #Market Outlook for the Second Half of 2024#

"So what?" Kantrowitz commented on this valuation, saying, "An 8% overvaluation is not enough to support a put argument. As long as the 'fear' catalyst does not come from common factors such as interest rates, employment, or inflation, the stock market can still maintain its high valuation."

He pointed out that if interest rates, unemployment rates, or inflation rates are not expected to rise immediately, even with a high valuation, the stock market may continue to rise. Kantrowitz stated in an interview with CNBC on Monday, "Almost all valuation models show that market prices have been high for quite a long time. We always look at this issue from the perspective of catalysts."

Due to the absence of significant negative factors at present, Kantrowitz advises investors to focus on stocks with strong profit momentum when building their investment portfolios. He said, "Although stock prices are high, I believe investors should focus on stocks that continue to have profitability, as these stocks may perform the best and maintain a high stock price over a longer period of time."

He also suggests that investors pay attention to credit spreads to determine if the market is experiencing panic, which could indicate a future decline in stock returns. However, current data shows no signs of pressure in the market.

Kantrowitz mentioned, "Despite the approaching presidential election results and the uncertainty surrounding the Fed meeting in a few weeks, the credit spread hit a new low last Friday." He believes that even though the stock market is slightly overvalued, tight credit spreads, a stable labor market, and continued GDP growth all indicate that investors should maintain a bullish attitude.