Goldman Sachs and Morgan Stanley CEOs issue joint warning: U.S. stock valuations are too high and could see at least a 10% correction!

```

Top Wall Street investment bank executives have jointly issued warnings: despite strong corporate earnings, the current valuation levels are concerning, and a correction of more than 10% could occur in the next 12 to 24 months.

On November 4, according to media reports, Morgan Stanley CEO Ted Pick and Goldman Sachs CEO David Solomon both stated at a financial summit organized by the Hong Kong Monetary Authority that U.S. stock valuations are worrying, and the market could experience significant sell-offs in the period ahead.

Goldman Sachs believes the stock market could see a correction of 10% to 20% in the next 12 to 24 months. Morgan Stanley said a 10% to 15% correction not driven by some macro cliff effect would be welcome. Both executives emphasized that corrections are a normal feature of market cycles and investors should view them as healthy developments.

Meanwhile, Capital Group President and CEO Mike Gitlin also expressed similar views, stating that "corporate earnings performance is strong, but valuation levels are challenging." He pointed out that most investors believe market valuations are between fair and fully valued, with few considering stocks cheap. Citadel CEO Ken Griffin noted that markets are most irrational at bull market highs and bear market lows, and that "we are now deep in a bull market."

Despite concerns about U.S. stock valuations, both Goldman Sachs and Morgan Stanley remain optimistic about the outlook for Asian markets.

High Valuations Raise Concerns

Goldman Sachs's Solomon pointed out that "tech stock valuations have been fully realized," but this situation does not apply to the entire market.

Morgan Stanley's Pick mentioned that the market has come a long way, but the U.S. still faces "policy error risk" and geopolitical uncertainties.

Capital Group's Gitlin bluntly pointed out the core issue facing the market. When asked whether stocks are cheap, fair, or fully valued, he said:

Most people think we are between fair and fully valued, but I think very few would say we are between cheap and fair.

Corrections Seen as Healthy Adjustments

Wall Street executives unanimously believe that market corrections should be seen as normal and healthy developments, not signs of crisis.

Goldman Sachs's Solomon emphasized that even in positive market cycles, corrections of 10% to 15% happen frequently and do not alter the fundamental, structural judgments about capital allocation.

He explained that the market goes up first and then corrects, giving investors a chance to reassess; this pattern is a normal feature of long-term bull markets.

Morgan Stanley's Pick stated that investors should welcome the possibility of cyclical corrections, regarding them as healthy developments rather than signs of crisis.

We should also welcome the potential for a 10% to 15% correction, especially one not caused by some macro cliff event.

According to reports, these views from major Wall Street bank CEOs are echoed by a recent warning from the International Monetary Fund, which warned of a possible sharp adjustment. Notably, Federal Reserve Chairman Powell and Bank of England Governor Bailey have also previously warned about excessive stock valuations.

Positive Outlook on Asian Markets

Despite concerns over U.S. stock valuations, both Goldman Sachs and Morgan Stanley remain positive on the prospects for Asian markets.

Goldman Sachs expects that, based on recent developments including positive progress in trade relations, global capital allocators will continue to show interest in China. Solomon pointed out that China is one of the "largest and most important economies" in the world.

Morgan Stanley maintains a bullish stance on markets such as China, Japan, and India, asserting that these markets have unique growth stories. Pick said:

"It's hard not to be excited about China, Japan, and India—three very different narratives, but all part of the global Asian story."

Pick specifically highlighted the investment opportunities in China's artificial intelligence, electric vehicle, and biotechnology sectors, and mentioned Japan's corporate governance reforms and India's infrastructure development as multi-year investment themes.

Risk Warning and DisclaimerThe market involves risks; investment requires caution. This article does not constitute personal investment advice and has not taken into account individual users' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investment is at your own risk. ```