The fundamental question in buying stocks is the expected earnings (or cash flow, depending upon the sector) compared to the stock price. One compares this to alternative choices like bonds or real estate or foreign markets. On a risk-adjusted basis, one’s asset allocation should favor the undervalued asset classes.

At “A Dash” we believe that U.S. equities, despite a multi-year, double-digit profit expansion, and some market reaction, still reflect intense investor skepticism about future earnings. The biggest cloud over the earnings picture is the continuing (and so far incorrect) forecast of a recession by bearish pundits, mostly non-economists.