LANGE FINANCIAL SERVICES MARKET AND TRADING BRIEFING. SUNDAY DECEMBER 1, 2013 6:00PM
Predictions of a correction are widespread including bullish and bearish contingents. Bubbles are a concern of many, especially by those who missed the rally or were wrong in their predictions. Yes there are some excesses but not enough to derail the market at this time.
Tapering by the FED has been used as a negative for the last 2000 DOW points. Yes the FED will taper but any policy is also not likely to derail a modestly strengthening economy. We will likely have a correction or a pause/pullback before early January to be viewed as a buying/trading opportunity..
Earnings for the S&P 500 are projected to reach $120 in 2014. Thus the price/earnings overall is a reasonable 15 times.The multiple was 20 times in 2007 and about 27 times in 2000. Interest rates in those years were substantially higher theoretically making current multiples much more reasonable. While we do not want to get carried away with these relationships, we do regard current overall valuations realistic.
More important than the valuation overall is our emphasis on growth stocks either from:
1. An Investment Viewpoint
2. A Trading viewpoint for those inclined to assume the inherent risks in trading.
Stocks on our “Favored List” have enjoyed excellent gains:
Along with numerous special situations that we have on our Favored List available at www.wallandbroad.net/favored and have TWEETED about on our Twitter Feed @fredwlange. These include:
AAPL, recently added to the favorites.
Dominating investor psychology is:
1. Correction apprehension.
2. The need to employ large cash reserves in anticipation of an improving economy and a higher market,.
We would view pause/ pullback as an opportunity to add to GROWTH equities. See Favored Stocks list below.
Favored Stocks List
Bank Of America
Las Vegas Sands