Every day, market commentators attempt to establish some link between a key news story, or a domestic or international incident, and the performance of the markets that day. Examples are the Koreans’ testing of a nuclear weapon, Saudi Arabian executions which angered Iran, China’s devaluation of its currency, or a belief that growth in China is slowing with “guesswork” as to what the effects of the unknown might be. But the current over-riding problem in equities markets, in our opinion, particularly US equity markets, is over-valuation.

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