The Market Forecast Season Has Arrived

Tomorrow kicks off my early 2009 Market Forecast events beginning with the 12th Annual "Market Forecast" luncheon at the New York Society of Security Analysts (NYSSA). The six-person panel* will be tasked with discussing and debating the political dimensions of the macro economic points noted in yesterday’s blog posting as well as the pressing issues of the credit crisis, valuation levels, earnings projections, and more (much more).

In this regard, allow me to recap the essential market-wide valuation issues facing investors. I draw your attention to the accompanying updated valuation parameters table (click image to enlarge). What this table does is help frame the key issues impacting equities via a matrix, which incorporates the essential components of valuation (cash flows in the form of operating earnings, prospective growth rates and risk factors in the form of a P/E).

As the table illustrates, the operating earnings projections for 2009 correspond to a likely P/E given the economic climate. For example, as I noted last Tuesday it is improbable that a "great times” P/E of 20 would apply if operating earnings plunged to $52. Under such a situation, a $52 number would likely come about due to an economic climate that is under serious duress (as in the “bad times” deep recession – P/E of 10 – or worse).

Investment Strategy Implications

What will my expert panelists have to say about these and other vital issues pressing on the markets and economy? Well, for those of you in the New York area** perhaps you can carve out some time from your busy schedule and come hear for yourself". For those not able to make the event, I will provide a recap of some of the key thoughts and views expressed.

*Richard Bernstein, Chief Investment Strategist, Head of Investment Strategy Group, Merrill Lynch
Vahan Janjigian, Ph. D., CFA, Chief Investment Strategist, Forbes, Inc.

Glenn L. Reynolds, CFA, CEO, CreditSights

Charles Steindel, Ph. D., Senior Vice President and Head Research Support Function, Federal Reserve Bank of New York

Jason DeSena Trennert, Managing Partner, Chief Investment Strategist, Strategas Research Partners

David A. Wyss, PhD, Chief Economist, Standard & Poor's

**members of the media attend free of charge