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Decidedly Speculative
Published: 12/14/2009 12:31:00 PM |
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As of last week, the S&P 500 nearly matched the richest valuations, on normalized earnings, ever observed prior to 1995. While it is quite true that valuations have been higher for the majority of the period since the late 1990's, it is equally true that the total return of the S&P 500 over that period has been dismal.
Undeniably, stocks are still “cheap” compared to the record overvaluations of 2000 and 2007. In order buy stocks on that basis, investors must accept the prospect of unsatisfactory long-term returns in any event, but they are free to speculate as long as they are willing to treat 2000 and 2007 as normal, and to rely on the market pressing to even greater overvaluation in order to achieve satisfactory near-term returns. To continue reading the full article, Click Here. |
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