User 68127

The Best Buy Signal in 51 Years

The Fed model implies that stocks would need to be trading at 40x EPS in order to equal the 2.5% earnings yield of the 10-year Treasuries. Unless earnings completely crater, that would imply some pretty nice appreciation for the S & P 500.

Stocks may be undervalued, although I would not rule out that possibility of a cratering of earnings. However, it is virtually certain that the Treasuries are overvalued. A case can be made for stocks or for cash, or even for corporates. What kind of a lunatic thinks that Treasuries present a good risk/reward?