Veal Market Ahead

I wouldn't go so far as to call this a bull market except by a purists' definition, but I am hopeful we are within reach of reasonable opportunity for long term gains.

As I have written before, aggregate corporate earnings cannot grow at a rate above that of GDP ad infinitum. There are tangential arguments with this view concerning private companies and their growth, but in a macro view, trees simply do not grow to heaven.

I have been working to test the waters with some reason and looked back to a prior moment to establish a benchmark for growth. I have used the post 1987 meltdown as that base. Taking a economic growth rate about 6% over the 125 years the market is now about fairly valued on a normalized growth rate. If Goldman Sachs new S&P earnings estimate for 2009 of $53 is right there is still the possibility of downdrafts, but investors can begin legging into positions now.

The market response to the automotive bailout refusal by the senate indicates a degree of selling exhaustion and discounting of negative news.

It's not a bull market, but could be a baby bovine.

John Barnyak
President