Cecil

9 Reasons Why We Are Close to, If Not Past, the Bottom

I too have been involved in the capital markets for over 30 years, and I have learned quite a lot about how things work. Putting all of my favorite indicators together, I come up with a scenario where the upside for stocks is significantly better than the downside. I agree with most- not all- of the points you have made. In my view, we are reasonably close to a floor in valuations, but still have some downside left as the market continues to be rocked by emotional reactions to what's going on in the financial system.

I also think that it's entirely possible for the S & P to rally as much as 25-30% in the next 6 to 12 months. This would not be as bullish as it appears on the surface. A 25% rally from here would only take the index to 1500, at which point it could peter out without making a new high. If this were to happen, it would fit with my view of the economy being mired in low growth/mild recession for longer than most expect.

The key, of course, is how to play such a robust rally in a very weak economy. And the question that is on almost every investors mind right now is- which investments should I avoid today? The fear of meltdown and a return to the great depression is palpable. It's primarily because of the pervasiveness of this fear that I end up agreeing with you- we must be near the bottom.

9 Reasons Why We Are Close to, If Not Past, the Bottom

Rich Bernstein, in the current Barron's, calculates the trailing 12 month P/E on the market to be 16 or 17. Add this to earnings estimates for 09 being too high, and I must ask you- how are valuations low?

Goldman: What Have You Done For Me Lately

What a weak argument! The chart shows that analysts were raising estimates for the financial sector all year long, until late June. Credibility anyone? So, to argue that Goldman is in trouble because these wrong-headed analysts have turned against them is very weak, indeed.