Have equity prices hit their peak?

We are constructive on equity markets for 2014, particularly relative to cash and fixed income, but with lower conviction than we have had for some time, given the margin of safety in valuations has long since eroded. Indeed, much of the current high valuation of equities comes from anticipation of better economic growth. Thus, our base case for equity markets is that this year will be more a year of validation than appreciation, with modestly positive equity price appreciation in line with earnings growth. That said, we think there are a couple of risky scenarios to be on the alert f...