You can count investor Wilbur Ross, CEO of WL Ross Holdings, among those who are concerned about the stock market's lofty levels.
The S&P 500 index stood less than 1 percent from its record high Tuesday around midday.
Valuations are stretched "in general," he told
TheStreet.com. "The overall market is trading about 18.5 times earnings. That's a pretty high multiple driven by very low interest rates and a lack of alternatives."
Ross cited the unattractiveness of short-term bonds, long-term bonds and commodities relative to stocks. As a result, "you either buy stocks or Picasso paintings," he quipped.
Ross' firm is selling into the strength. "We've sold a little bit more than 2.5 times as much as we've bought in the last 12 months."
As for private equity, Ross sees value in the energy sector. "Smaller exploration and production companies, particularly their debt instruments, are a very interesting place," he said. "We've been collecting a breadbasket of them. If you hold until maturity, you probably get a return in the low teens."
Of the developed markets, Ross likes Japan. "We're a believer in Abenomics. We think it's starting to work."
Meanwhile, the views of
John Hussman, president of Hussman Investment Trust, on stocks almost make Ross sound bullish.
"On the basis of valuation measures best correlated with actual subsequent market returns, we can say with a strong degree of confidence that the S&P 500 would presently have to drop to the 940 level in order for investors to expect a historically normal 10-year total return of 10 percent annually," Hussman wrote in his weekly commentary.
"That 940 figure for the S&P 500 would not represent some extreme, catastrophic outcome. It’s not a level that would even represent undervaluation from a historical perspective. It’s the level that we would associate with average, historically run-of-the-mill long-term equity returns. As we observed at the 2000 peak, 'if you understand values and market history, you know we’re not joking,'" he noted.
"That said, if one believes that depressed interest rates warrant not only a low prospective return on stocks, but also virtually no risk premium whatsoever despite their significant full-cycle volatility, then you might be quite happy with the prospect of a 1.4 percent annual nominal total return on the S&P 500 over the coming decade, which is what we presently estimate."