, Columnist
Large-Cap Stocks Are Reasonably Priced. That's No Joke
Even in a worst-case scenario, where big companies only hit their most pessimistic profit estimates, price-to-earnings ratios wouldn't be out of line.
The bull market in stocks has staying power.
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Equity investing is an optimist’s game. The only time stocks look cheap is when economies are dreadful, making corporate earnings power uncertain. At any other point in the investment cycle, valuations rarely seem affordable. You need a glass-half-full mindset to see the opportunities for earnings growth at those times.
The pessimist still has a role to play, however. Looking at the world with a clear eye is a critical skill to avoid the herd mentality that takes over as stocks rally. With U.S. stocks trading for 18 times earnings and -- before this week -- sleepwalking their way to new highs, we shouldn’t simply ignore the glass-half-empty crowd.