The Bull Case For Stocks Is Compelling
An economic slowdown might actually extend the life of the expansion and the bull market in equities.
The bull market in stocks is far from over.
Photographer: Chris Hondros/Hulton ArchiveThe stock market is vulnerable to the manic behavior of investors who lurch between greed and fear. This happens so often that it is regarded as normal. The market is now priced for the fear of an imminent recession, which is unlikely. Barring some unexpected adverse shock, equities represent an exceptional buying opportunity.
Let’s start with market valuations. The S&P 500 Index is trading at about 15 times expected 2019 earnings of $178 per share below the average of about 16.2 times over the past 50 years. By itself, this is sufficient to suggest stocks are cheap, but that valuation is skewed by a few very large, rapidly growing firms that are valued at dramatic premiums to the average.