- The broader U.S. stock market is historically overvalued, and most equities, including a majority of the popular favorites, offer very poor starting valuations.
- Bonds are not much better, as very low nominal yields offer minimal total return prospects, and the potential loss in real terms makes bonds a suboptimal choice.
- Cash is less risky than stocks and bonds right now; in my opinion, however, inflation is a threat to the real return of cash.
- The only major asset class that is historically undervalued is commodities.
- Commodity equities, which are even more loathed than commodities themselves, offer outstanding starting valuations, relative valuations, and absolute free cash flow yields.
For further details see:
Run From Stocks, Hide From Bonds, And Embrace Commodities