Undervalued, maybe. The model is really a ratio analysis, and not much of a model. Can see the details at Yardeni's site. However, like all models, they require good data as input. I expect when we look back at this time in say mid-1999, the market today will appear to have been fully valued. Earnings estimates will have been revised downward pretty-much across the board. Our trading partners will still be in trouble. The IMF will be out of money again. Etc.
Lower interest rates, for sure. Maybe even a 3% long bond. Several more killer rate reductions by the Fed. <g> But will lower interest rates save us from loss of offshore markets? Look at Japan with their 0.25% rate, just reduced from 0.5%. Bonds look good today, but bond ratings can be downgraded.
Anyway, tax selling season is next. Maybe already underway? There will be many, many good-looking buys, and the January effect on the horizon. Time to keep some powder dry.
All just my opinion, of course. And I could be wrong.
More later.
Dennis |
