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U.S. equities may be richly priced, but trying to time a correction remains a perilous gamble, according to NYU finance professor Aswath Damodaran. In his latest blog post, the valuations guru described the market as “fairly highly valued” and outlined five broad strategies investors could consider, ranging from maintaining their portfolios to taking aggressive positions, while cautioning that even carefully planned moves may fail.Damodaran noted that 2025 has been a turbulent year for stocks. He said, “Jerome Powell, the current Fed chair, had described the market as ‘fairly highly valued.’ In market strategy speak, these are words that are at war with each other, since markets can either be ‘fairly valued’ or ‘highly valued,’ but not both.” Despite this ambiguity, Damodaran agreed with Powell’s assessment that stocks are richly priced, but cautioned that leaping to the conclusion of an imminent bubble or correction is much more complicated.“After a first quarter, where it looked like financial markets would succumb to the pressure of bad news, stock markets have come roaring back, surprising market experts and economists,” he said. Notably, the technology-heavy NASDAQ rebounded from a 21.3% drop through April 8 to post a 17.3% gain year-to-date, outpacing the S&P 500’s 13.7%.The bulk of gains stems from what Damodaran calls the “Mag Seven”, tech and communication giants including Alphabet and Meta, whose combined market capitalization now accounts for over 30% of U.S. equities and contributed more than half the total market value increase this year.Also read | Frankenstein Monster: Aswath Damodaran says upcoming NYU bot in his name could out-fake scammers, gives Insta scam 'A-' gradeValuation metrics signal cautionMultiple valuation indicators converge to signal elevated market prices. Damodaran highlighted that all three popular PE ratios, trailing, normalized, and CAPE (Shiller PE), are near all-time highs, barely surpassed only by the dot-com boom peak. He said, “All three versions of the PE ratio tell the same story, and in September 2025, all three stood close to all-time highs.”Looking at expected returns, Damodaran’s calculation of the implied equity risk premium (ERP) for the S&P 500 stands at 4.01%, which is low compared to post-2008 crisis levels and indicative of an overpriced market. Yet, compared to the dot-com bubble era when the ERP dropped to 2%, the current market does not constitute a classic bubble scenario.5 strategic responses for investorsRecognizing that an “overpriced” market diagnosis does not automatically translate into an actionable strategy, Damodaran offered five measured approaches investors might consider:Do nothing: Maintain existing portfolio allocations and continue regular investing practices without changes.Increase cash holdings: Build liquidity by directing new investments to cash-like instruments and consider selling perceived overvalued holdings cautiously.Change asset allocation: Adjust the mix of stocks and bonds or shift geographic exposures based on valuation differences.Buy protection: Use derivatives such as puts or futures to hedge portfolio risk without large portfolio disruptions.Make leveraged bets: Aggressively bet on a market correction through leveraged derivative positions or short selling.Lessons on market timingDamodaran’s verdict on timing the market is sober: “Over the last century, this market timing strategy would have reduced your annual returns 0.04% each year, and that is before transaction costs and taxes.” Even more aggressive or more frequent timing schemes failed to deliver positive excess returns in his backtests.He distills three essential takeaways: first, market timing metrics must be comprehensive and account for fundamental market shifts; second, success demands rigorous backtesting of actionable strategies rather than reliance on statistical correlations; and third, “markets can stay mispriced for longer than you can stay solvent.”For investors grappling with today’s “fairly highly valued” market, Damodaran stressed that translating a view of overvaluation into successful trades is far from straightforward. For investors, the decision to attempt market timing remains deeply personal, but the professor’s analysis serves as a cautionary reminder that even when stocks look pricey, predicting the timing and extent of a correction is an inherently uncertain endeavor.Also read | Tata Investment shares fall 9% in October after a sizzling 53% September rally. Has the frenzy run its course?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

Dabur India has released a preliminary update on its performance and demand trends for the quarter ended September 30, 2025 (Q2 FY26), highlighting that the recent GST reforms implemented by the Government represent a significant step towards improving affordability and enhancing purchasing power.Following this, the shares of Dabur India were trading 1% higher at Rs 498 on the BSE.Dabur stated that categories such as oral care, juices, hair oils, shampoos, digestives, OTC, branded ethicals, and culinary—which together comprise approximately 60% of Dabur’s India business—are set to benefit from a reduction in GST rates from 12%/18% to 5%.As of the reporting quarter, ~85% of Dabur’s portfolio is now taxed at 5%, which the company views as a key positive. Dabur reiterated its commitment to passing on the benefits of the reduced GST rates to consumers.However, the GST Council’s announcement in September 2025 led to short-term disruption, as consumers deferred purchases to benefit from lower MRPs and distributors worked to clear higher-priced inventory.This impacted sales during the month of September and, by extension, Q2 FY26. Despite this, Dabur’s non-GST impacted brands such as Dabur Honey, Anmol Coconut Oil, Gulabari, and Hajmola Jeera performed well. The company stated that retail offtakes remained resilient, allowing it to sustain market share gains in 90% of its portfolio.In the Home & Personal Care segment, the Oral Care portfolio continued its strong growth trajectory and is expected to deliver double-digit growth, driven by products like Red Toothpaste and Meswak, supported by on-ground execution and marketing efforts.The Skin Care portfolio is anticipated to grow in high single digits, led by brands such as Gulabari and Oxy. In Hair Care, Shampoos are expected to post high-single digit growth, led by Vatika, while Hair Oils are expected to see mid-single digit growth. The Odonil franchise within Home Care also performed well.In the Healthcare segment, brands such as Dabur Honey, Honitus, the Hajmola franchise, and Health Juices are expected to report double-digit growth, supported by strong product portfolios.The Foods & Beverages segment, particularly Culinary, is also expected to record double-digit growth, with strong performance in Oils & Fats. The Beverages business reported robust growth of 30%+, driven by Activ juices and Coconut water.However, the overall beverage portfolio was impacted by higher-than-expected rainfall and floods in July and August.Across channels, E-commerce (including Quick Commerce) is projected to grow in double digits, while Modern Trade maintained its growth trajectory.In the international business, key regions such as MENA, Turkey, Namaste, and Bangladesh performed well, while Nepal was adversely affected by political unrest. The overall international business is expected to post mid-single digit growth in both INR and constant currency terms.For the quarter, Dabur expects consolidated revenue to grow in mid-single digits, with operating profit growth broadly in line with revenue.The company concluded by noting that with supportive macroeconomic conditions and the recent GST rate cuts, consumption is expected to strengthen, and revenue growth is anticipated to regain momentum in the upcoming quarters.Also read: FII bears have never been this harsh on Nifty, but that may be the buy signal! Here's why(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)