Two senior Wall Street bankers have sounded a warning that United States stock markets may be overvalued.
The comments attributed to Morgan Stanley CEO Ted Pick and Goldman Sachs CEO David Solomon indicated they were concerned the ongoing rally in U.S. stocks may result in ‘drawdowns’.
They were speaking at the Global Financial Leaders' Investment Summit in Hong Kong on Tuesday.
“We should welcome the possibility that there would be drawdowns, 10% to 15%, that are not driven by some sort of macro cliff effect,” Pick was quoted as saying in a Reuters story.
This view was supported by Solomon, who said shifts in sentiment could happen quickly.
“When you have these cycles, things can run for a period of time. But there are things that will change sentiment and create drawdowns—or change the perspective on the growth trajectory—and none of us are smart enough to see them until they actually occur,” he said.
Solomon said technology company earnings multiples were “full” but valuations across the market more generally were more measured.
Their statements reflected rising worries that demand for artificial intelligence (AI) and high-growth technology stocks may lead to a speculative bubble.
“Drawdowns can be healthy for the market. What matters is ensuring they’re driven by valuation adjustments—not by crisis,” Pick said.
