The S&P 500 hit a record high at the end of August, trading at over 6 500, having lifted more than 15% over the past year. The market traded at a price-earnings (PE) ratio of 29, making it expensive relative to its very long-term moving average of nearer 20.

In an August note, Zurich-based investment house, Julius Baer, cautioned that the high number was “reinforcing concerns that stocks may be overvalued” but also acknowledged that “some argue that today’s high valuations are justified. The composition of the S&P 500 has shifted significantly in recent years, with tech companies like Apple, Amazon, and Microsoft – known for their high profit margins and growth potential – playing a larger role in the index. In this context, higher valuations might reflect these companies’ strong earnings prospects. Moreover, interest rates remain relatively low, making equities more attractive than bonds.”

For South African offshore investors the high market levels and PE ratio add to an equation already complicated by the Rand drawing support from a US dollar that has weakened by more than 10% since January.