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-- turning back to the markets the S&P 500 right now sitting at a new all time high climbing more than 13% so far this year.
How come too far too fast my next guest says that while valuations are no longer as compelling as they were a year ago there are still good deals to be has.
Joining -- now Sam Stovall chief equity strategist for S&P capital IQ.
Sam thanks for coming on the show.
There was an article -- -- that caught my attention.
Where the -- said what optimist and people on business TV ignore.
It's that high prices.
The boom has -- promise of lower not higher rewards in the future our prices too high right now.
To give us decent return.
I don't think they're too high right now I think what's instinct is that history provides us with a guide certainly not gospel.
To say that this could actually better be a better year than people are expecting or had -- experience so far this is the fifth year of this bull market.
And since World War II 83% of those.
Bull markets that celebrated their fourth birthdays went on to celebrate their fifth and the average price increase was 21%.
One of the things that investors look at our PE ratios how expensive are the underlying stock -- I'm buying.
And right now when we look at PE ratios whether you're looking at projected earnings or trailing earnings.
We're looking at discounts basically of anywhere from 8% to 16%.
But all those indications are that we all right now below.
These averages -- you go back to 1988 or 1948.
At this time though some are wondering if there is a bubble in corporate earnings having since the fourth quarter of 2009 SB profits have jumped seven -- 1%.
That's a big number.
And and it it makes you wonder how much longer that.
Sure well I think anytime you have an advance whether it's in prices whether -- -- earnings etc.
the question is well gee you know is that going to last.
Going back to 1936.
The average earnings increase on a quarterly basis is close to about 7%.
And that's the number that is expected for all of 2013.
In the most recent quarter doesn't.
IQ -- indicating that we're probably going to be up about 5%.
For this first quarter which while below that longer term average.
Is a lot better than the one half of 1% that was expected at the beginning of this quarter.
-- from JPMorgan made it compelling argument on the show yesterday saying that -- that where we are now breaking this new record -- the last couple times we've done it.
More hedge funds are extended long so in other words there aren't a lot of make an incremental buyers left on the sidelines right now does that arguments where you.
Well from the hedge fund perspective that's possibly the case but I think if you talk to an awful lot of individual investors.
And even a lot of institutional investors.
They are dis believers in this rally out of people have an awful lot of cash on the sidelines.
And I think that's the reason why bull markets take the stairs but bear markets take the elevator hathead people in -- since throw in the towel.
At different rates of pace on the way up and that's what could sustain us up until 167 B 17100.
On the S&P 500 interesting argument Sam thanks coming on Alex great.
My -- Melissa.
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