Prudent Man CFA

Despite Its Recent Run-Up, The DJIA Isn't Expensive

Optimism is good. The question is what is the market discounting, if anything but momentum?

I am naive enough to want the market to try to measure value. This is difficult when earnings are continuing to decline year over year, especially when the analysts estimates are close to being criminal and what earnings gains there are appear to be coming from cutting costs and, thus, increasing unemployment.

Later earning comparison should improve which should give us a better view on how companies adjust to the new economic realities. Then we have the imperative of decreasing the bloated money supply and federal debt and interest rates become "real" accordingly. Hopefully, Fed subsidizing debtors at the expense of savers stops.

In summary, confidence is increasing but is the move in prices increasing risks? Are we looking at "real" economic growth or the result of the printing of money? Top line growth and free cash flow have been deteriorating and they are two financial metrics that are difficult to manipulate and are indicative of increasing or decreasing value.

I would be careful of analysts over-adjusting their earnings for the next quarter. That is why I continue to lighten my equity risks during these rallies. I rather be late than broke. I have been both and it is a expensive education.

Higher Bond Yields: Are We Making Progress?

"Sterilization" is transferring bad bonds for bad currency in circulation and is a Fed scam that a lot of people don't quite get.

Sounds sophisticate so is probable important to academic economists.