Investors could be overvaluing the sharemarket, by failing to factor in new Government policies and rising costs.

Brokerage Forsyth Barr is forecasting subdued company earning prospects in the next few years, following three years of solid growth.

The sharemarket hit another record on Friday, rounding out the week with a 3.5 percent gain.

But Forsyth Barr head of private wealth Rob Mercer told Mike Hosking the business environment is changing quickly.

"There are going to be changes and impacts on companies earnings. Costs are already starting to rise so they are going to have to manage in a tight Labour market."

LISTEN ABOVE AS ROB MERCER SPEAKS WITH MIKE HOSKING