Too much bullishness<g>, have to balance that out.
smartmoney.com
Kerschner Turns Cautious
By Stacey L. Bradford
BRACE yourself. This market is even a bit too frothy for PaineWebber's Ed Kerschner. He has officially warned investors that the market is overvalued and could correct up to 15%.
"Whether it be DJIA [Dow Jones Industrial Average] 10,000 or 9500, it would seem that this market is a little ahead of itself," Kerschner says. He explains that the levels we are seeing now would be more appropriate in 12 months.
This warning may come as a surprise to many people who have been following Kerschner's advice for the past few years. As our No. 2-ranked pundit, he has made a reputation for himself as one of the market's most exuberant bulls. For example, last October, when almost everyone else thought the Asian contagion had finally infected U.S. equities, Kerschner boldly and correctly predicted that stocks would bounce back.
But Dow 10,000 seems to have spooked Kerschner. While the media has been celebrating this new level as though it actually means something, Kerschner is becoming increasingly concerned that the fundamentals can't support it. "Unless interest rates move meaningfully lower and/or 1999 earnings growth is meaningfully stronger than the 5% to 8% forecast," Kerschner expects, in the best case, to see the market stall around these levels. But "there is now the very real possibility that if this market doesn't simply run out steam and stall," he cautions, "you could expect to see headlines of DJIA 9500 or even 9000 before headlines of DJIA 11,000."
|
