Is This The Best Time, “The Opportunity Of A Generation,” To Invest In Equities?

US investors are warming up to equity investment opportunities following the stock market’s bull-run since the start of 2012. Leading brokerages are upbeat about equities with some of them terming the current situation as “the opportunity in a generation.”

Jeffrey Saut, chief investment strategist at leading brokerage firm Raymond James and Associates Inc who oversees $300 billion in investments, thinks markets are set to witness a massive shift to US stocks, equity MFs and equity ETFs.

Is the euphoria justified? How good is the current market valuation? Are we heading for a secular bull run?

Though the markets seem to be fairly valued, he thinks the best investment opportunity was in October last year, when the S&P 500 was trading at 10X forward earnings estimates with an earnings yield between 10 and 11 percent. The equity risk premium was estimated between 8 and 9 percent in October last, a level not seen in decades.

Saut doesn’t think the market will go up substantially in the next couple of months since we are already 30 percent higher from the October 4, 2011 level. He feels the market is already overbought and will take some time before breaking off.

He won’t be surprised if there’s a pull-back and prices fall by about 3-8 percent, presenting fresh buying opportunities. In any case, markets are likely to close higher by the end of 2012. You can watch the video here.