Yes, despite all (the negative stuff) I’ve posted, IF earnings hang in there over the next few years (that is, they don’t decline materially) AND rates don’t materially increase, then the S&P is arguably roughly at fair value, give or take 10%. The Nasdaq, however, still could get a shellacking because it’s valuation is considerably greater (mid-30x EPS) with no commensurate earnings growth advantage (anymore). The key will be earnings, in my opinion. I don’t expect long rates to increase materially for the foreseeable future. But I think earnings are going to take a pretty big hit, as they did in 2000/2001… I’m guessing in 2008/2009. But, in any case, we’ll see. For the record, I have no direct exposure to the S&P or Nasdaq, or publicly-traded stocks in general, but they do convey a lot of information about where market/economic psychology is at a given point in time.
