Wednesday's Earnings Note Revisited

I wanted to add one comment on Wednesday's  Ed Yardeni's earnings note.  Unfortunately I forgot to conclude all of my thoughts at the bottom of that post so I'll put it here.  I've never in my 28 years seen the kind of valuations we are experiencing currently except when we were either going into a war or beginning a recession.  Syra and Iran to the contrary, there is no evidence that we are on the cusp of some sort of conflict similar to the Gulf wars.  Economic data currently is also not supportive of a recession although it has shown that growth has slowed since the 1st quarter ended back in March.   So either we're going to have that recession, a war or some natural disaster is going to come calling or something in Europe is really going to blow up because otherwise stocks are dirt cheap.

What this tells me is that stocks are an under owned asset class, perhaps as unloved now as in any time in my career.  I know what the valuation markers say and I know that at times I can sound like a broken record in this regard.  But someday folks are going to wake up and realize the inherent value in American companies.  When that happens I think stocks will soar.  I'm so confident of that statement that I think when the final history of this decade is written those of us lucky enough to be around at that time will look back and say something like, "I can't believe where XXXXX was back in 2012".  That may not happen tomorrow as I'm well aware that we have all sorts of short term concerns right now.  But longer term, in the time period where as Warren Buffett likes to say Mr. Market gets a vote, stocks valuation will come out.  It is in that frame that for the most part we invest client monies and it is in that time frame that I make for the comments above.

I'm going to be in and out for a bit over the 4th of July.  Look for something here Monday and Thursday next week.  The rest of the time we'll break in only if there's a need to do so.