The Bad Times Happen When Market Valuations Are Too Rich...Like Now | New Harbor Financial
TL;DR
Investment advisors from New Harbor Financial warn that US stock markets are at historically overvalued levels, discussing their strategic shift toward international diversification and technical analysis following a sharp market reversal from March lows.
⚠️ Market Valuation Concerns 3 insights
Historic overvaluation warning
US stock market is at one of the most overvalued points in history, with bad market events always occurring from rich valuations.
Sharp technical reversal from March 30th
Market experienced violent V-bottom recovery with almost daily gains since March 30th low, creating overbought conditions.
Technology sector bifurcation
Semiconductors surged 67% while software remains down 20% over six months, showing extreme divergence within tech.
🎯 Investment Strategy Adjustments 3 insights
Current 48% equity allocation
New Harbor increased from 41% to 48% equities after removing put hedges that went profitable during the selloff.
Heavy international diversification
Nearly half of equity exposure is in non-US markets, with three-quarters focused on emerging markets and commodities.
Selective regional exposure strategy
Targeting countries like Brazil with domestic energy resources while avoiding energy-dependent nations like Taiwan and Japan.
📊 Technical Analysis Insights 3 insights
Point and figure charting system
Using systematic technical analysis and relative strength measurements to time market entries and exits.
Historical precedent for pullbacks
When tech sector gains 10%+ in a month, subsequent returns show significant volatility and often negative performance.
Overbought but not extreme conditions
Market approaching upper Bollinger bands but not at dangerous levels, suggesting potential pause rather than crash.
Bottom Line
With US markets at historic valuations, investors should consider rebalancing toward international exposure and maintaining systematic risk management rather than chasing the recent tech-driven rally.
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