In his daily note David Rosenberg says that if you haven’t got on the bull train already, it’s too late:
Sorry, but that time has passed. But we will probably get another kick at the can because we are sure that the “event risk”, which caused so much turbulence and buying opportunities in 2010 will come around again in 2011. But this is one overextended U.S. stock market, that is for sure.
We have a dividend yield on the S&P 500 of 1.8% with a 10-year bond yield at 3.7%. Somehow that is just slightly less appealing than the 3.6% dividend yield and 2.8% bond yield we had at the March 2009 market lows. The dividend yield, by the way, is where it was at the market peak in October 2007. Food for thought.
The cyclically-adjusted P/E ratio on the S&P 500 is now 23.3x, where it was back in May 2008. At the lows, it was trading at 13.3x. So if we are talking about the best entry point from a value perspective, it was then, not now.
Amazingly, the Investors Intelligence survey now shows 53.4% bulls and 23.3% bears. At the March 2009 lows, these numbers were basically reversed.
Equity portfolio manager cash ratios today are at 3.5%; at the March 2009 lows they were closer to 6%. As an aside, the last time the liquidity ratio was as low as it is today was in September 2007. Gulp!
Back at the March 2009 lows, economic indicators like the ISM was at 36 and all we could do from there was to look up. Today it is at 61 and … well, you know which way it’s going from here.
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