• Investing & Markets

Low Valuations Means a Good Time to Buy

January 30, 2012 | Brendan Erne, CFA

These are uncertain times. Nobody knows exactly how the situation in Europe will impact global stocks, but that doesn’t mean owning equities is a bad idea. US stocks are trading at extremely attractive levels relative to history, and markets like to climb a wall of worry. So if you’re sitting on the sidelines waiting for an “all clear” signal, you might miss out. …

U.S. Stocks in Longest Valuation Slump Since Nixon

Valuations for U.S. equities have been stuck below the five-decade average for the longest period since Richard Nixon’s presidency, a sign investors don’t trust earnings even after a three-year bull market. Analysts estimate profits in the Standard & Poor’s 500 Index will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, the S&P 500 hasn’t traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.

Read the rest on Bloomberg Personal Finance.

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