Hussman's Weekly Market Commentary - Garbage Stocks
This week Hussman writes about how lower quality stocks have been fueling the market in the past months and that we're near a market top.
Hussman Funds - Weekly Market Comment: April 3, 2006 - Garbage Stocks:
"As of last week, the Market Climate for stocks remained characterized by unusually unfavorable valuations and relatively neutral market action. At present, risk-free interest rates near 5% represent a substantial hurdle for stocks to compete with over the coming, say, 5 year horizon. Even assuming continued earnings growth along the peak 6% trend for the S&P 500, a price/peak-earnings multiple of just under 16 at the end of that 5-year horizon would be sufficient to hold the total return on the S&P 500 below 5%. It would be dangerous to assume that rates need to rise much further to draw demand away from stocks."