monday market malady, page-135

Low Valuations

The S&P 500 is now valued at 15.4 times estimated profit, the lowest since January 1991 when compared with actual earnings, according to Bloomberg data. That's one reason why any slide in U.S. stocks may be limited, Bespoke wrote in a note on July 24.

Those valuations, coupled with steady Fed interest rates since June 2006, are enough to make stocks a buy, said Walter ``Bucky'' Hellwig of Morgan Asset Management. The turmoil in the credit market is allowing him to add to holdings in technology, energy, and raw-material shares at cheaper prices.

``In a perverse sense, the widening of these spreads in conjunction with rising earnings makes the stock market more attractive,'' said Hellwig, who helps oversee $30 billion in Birmingham, Alabama. ``Interest rates are still low, inflation is still low, and there still is global growth and equities are becoming more attractive.''