Wednesday, June 27, 2012

Market Headed Higher?

Despite the Dow Jones Industrial, Transportation, and Utility averages all having broken their uptrends from their recent lows, I still think stock prices are headed higher.

Market sentiment has been unusually gloomy on a number of measures, which historically has preceded gains in stock prices.  It is no longer news that the economy is sluggish, and valuations relative to bonds are quite attractive.  Historic valuations on earnings, book value, and revenues are moderately attractive.

I would still maintain significant cash reserves for unanticipated further declines in stock prices, but I also would have enough in the market to participate in what I expect will be higher prices over the short term at least.

Steve Lehman

S & P 500:  1332

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