Markets are ‘overexuberant’ as risks mount, economist warns

New York (CBS Marketwatch, Oct 24,2017): If you’re looking for a bearish warning on U.S. stocks and a long list of things that could go wrong, economist Vicky Pryce has delivered.

“Are markets overexuberant? I think perhaps they are in the U.S,” said Pryce in a speech Monday at the Inside ETFs Europe conference in London.

Markets SPY, +0.18%  love the Trump administration so far, but we don’t know what could happen next, she said.

There are many issues that could help bring about an end to the buoyant mood, Pryce added, as she showed her “Problems abound” slide pictured below.

 

“Very low interest rates, of course, encourage lots of risk taking,” said Pryce, an independent economist who is known in part for her “Prisonomics” book. The former economist for KPMG, the British government and other organizations wrote the 2013 book after serving time for perverting the course of justice by taking her then-husband’s speeding points.

Pryce — whose Monday speech was titled “Are We in a Bubble?” — is hardly alone in offering a long list of potential risks for investors. Financial adviser Josh Brown on Monday suggested it’s easy to give an exhaustive rundown of all the things that could go wrong.

What takes talent is putting scary things in context and then “managing portfolios that offer an answer to multitudes of potential outcomes,” wrote Brown, CEO at New York-based Ritholtz Wealth Management, in a post at his Reformed Broker blog.

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