March 15,2010

 
Our opinion of the investment markets has not changed.  We remain bullish on equities and negative on bonds and the U.S. dollar.  The stock market is reasonably priced based upon our earnings outlook for 2010 and 2011.  We look for better gains in earnings than the average analyst.  Corporations are very lean.  Sales increases will fall to the bottom line very quickly.  In our opinion, the stock market is valued at 12 times this years earnings, and 10 times 2011 earnings.  10 year treasury bonds sell at 27 times earnings.  Why pay twice as much for bonds versus stocks?  We continue to like the financial stocks.  The surprise here will be the lack of write downs in the balance of 2010, not the other way around. 

We expect the economy to grow at 4.5% for 2010 and a similar rate in 2011.  Growth outside the U.S. should be higher (ex) Europe.  Our bullishness is in no small part due to the unprecedented monetary creation from most all world-wide central banks.   

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