Despite all this we remain confident that income and capital gains tax rates will be reduced, the marriage and death tax will be eliminated, the Fed Funds Rate will be lowered another 100-150 basis points and an intelligent, comprehensive, national, energy policy will be developed and enacted. Our data also infers that stocks remain a better investment alternative than AAA corporate bonds. Absolute and relative values increase as interest rates fall. On the other hand, if earnings growth continues to fall, so will our valuations. Remain very selective.
Some stocks continue to be overvalued.
The overall trend of the market is still down. We urge our readers to remain confident, but cautious. The market may have found its bottom, but the real key will be the continued secondary test of the recent lows. These stocks may take a short term hit in a down market, but we believe in the long run they have minimal downside risk and possess above average upside potential. Investing in equities requires a certain amount of courage and optimism.