FREEDOM FORUM: Add a Comment

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• WSJ

And with the Federal Reserve still intervening heavily to hold down borrowing costs and the government spending money hand over fist, few want to bet against this bull run. However, every post-recession period is different, and this one still looks nasty enough to cause disappointment on fundamentals. Indeed, the bulls' weakest point is their reliance on the earnings rebound predicted by Wall Street analysts. The S&P 500 is trading at 16.8 times consensus 2009 earnings, above its level at the market peak in October 2007. That is why the bull case says investors need to look even further forward, at 2010 forecasts, which gets the multiple down to 13.3 times. But that distant-hope scenario has its shortcomings. Take a stock like Home Depot, trading at 16.8 times consensus fiscal 2011 earnings, very high for a company facing intense competition and exposed to the troubled housing market. Implicit in the bull case is the belief that the government just has to carry the economy

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