But after having been handsomely rewarded over the last several years, U.S. investors can now agree on one more thing: The middle looks crowded.
High yield bonds, for one, aren’t cheap. Yes, junk bond yields have risen over the last two years, but the current yield on the Barclays U.S. High Yield Intermediate Index is 7.9 percent, which is still well below its historical average yield of 10.4 percent since 1987 (the earliest year for which data is available).
Quality stocks, too, are no bargains. The earnings yield on the MSCI USA Quality Index is 5.4 percent (calculated using three-year trailing average earnings), whereas the earnings yield on the S&P 500 Value Index is a more generous 6.5 percent.
Some big-time money managers are bemoaning the dearth of attractive investment options. Larry Fink is worried about the sustainability of U.S. stock prices in the face of declining U.S. corporate earnings. Howard Marks sees markets that are offering low returns, but high risk. Bill Gross and Jeffrey Gundlach see high risk in traditional safe havens like government bonds.
Investors still agree that the current investment environment is precarious. Just don’t expect consensus any longer about how to deal with it.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.