Stay out J!
From the R man - RUSSELL, hate him all you want but he is right.
"There are many arguments about how to judge values, but I prefer the classic ones. Right now the S&P is selling at a sky-high 25.06 times earnings, three times sales, 6.25 times book and offering a thin yield of 1.25%. The earnings yield (earnings divided by price) is 3.99, this compared with the yield of 5.31% on the 10-year inflation-adjusted note (they should be about equal).
Nevertheless, the Fed is providing massive liquidity, and thousands of mutual fund managers are vying with each other at spending their spare cash. Thus, we have a herd instinct as fund managers compete to invest "other people's money."
Again, I'll repeat - at dividends of 1.2%, there's no return on the investment today. Therefore, all emphasis is on capital gains. This increases the volatility of the market, and puts super-high emphasis on stock appreciation.
For all of the above reasons, the stock market here in 2001 has been turned into a Wall Street version of Las Vegas. But if that's what we have, then that's the reality, and we have to deal with it.
At this point I really believe it's a personal decision whether to "play" this market or leave it alone."
He is not playing and leaving it alone. No one can call this market. It has the chance to go much higher, but then again a few news events could wipe it out. The casino like it has never been right now and RIPE with danger.
I am in his camp - leave it alone.
West |
