Low Valuations Means a Good Time to Buy

[dropcap]T[/dropcap]hese are uncertain times. Nobody knows exactly how the situation in Europe will impact global stocks, but that doesn’t mean owning equities is a bad idea. US stocks are trading at extremely attractive levels relative to history, and markets like to climb a wall of worry. So if you’re sitting on the sidelines waiting for an “all clear” signal, you might miss out. …

U.S. Stocks in Longest Valuation Slump Since Nixon

[quote]Valuations for U.S. equities have been stuck below the five-decade average for the longest period since Richard Nixon’s presidency, a sign investors don’t trust earnings even after a three-year bull market. Analysts estimate profits in the Standard & Poor’s 500 Index will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, the S&P 500 hasn’t traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.[/quote]

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Brendan Erne, CFA
Brendan Erne serves as a Research Analyst with Personal Capital Advisors. He has over 10 years of industry experience, spanning almost all levels of the investment process, including several years at Fisher Investments as an equity analyst covering the Technology and Telecommunications sectors. He also co-managed a large cap growth portfolio and co-authored Fisher Investments on Technology, published by John Wiley & Sons. Brendan is a CFA charterholder.
Brendan Erne, CFA

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