The Weekly View: As Good As It Gets For Stocks
Comment of the Day

August 07 2013

Commentary by David Fuller

The Weekly View: As Good As It Gets For Stocks

My thanks to Rod Smyth, Bill Ryder and Ken Liu for their ever-interesting investment timing letter, published by RiverFront. It is posted in the Subscriber's Area but here is a brief sample
Shorter-term anything can happen, but we believe a sustainable economic expansion is underway, which will support the stock market until fears of a recession return. This expansion has been better for companies' earnings, and hence stock owners, than it has for wage earners on Main Street. Our Weekly Chart indicates that, for the US, the widespread fear that has persisted over the five years since the great recession is receding and consequently, price-to-earnings ratios (PEs) are expanding. Without any further PE multiple expansion (or significant contraction), the S&P could reach 1800 by year end and 1850 by the middle of 2014.

David Fuller's view The RiverFront team have been accurate with their forecasts but this is an optimistic outlook, given today's valuations on Wall Street. Therefore any adverse surprises or other developments of potential consequence, plus the probability of turbulence as QE is wound down, suggest a choppy market environment for the medium term. Nevertheless, companies are doing far better than middleclass workers and the slowly recovering economy. US corporations continue to benefit from competitive natural gas prices, thanks to fracking, plus the US led accelerating rate of technological innovation.

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