April 9, 2014

Equities not attractive at present levels

I continue to hold to the view that the S&P 500 is fairly valued at approximately 1650 (or about 10% below current levels) and that the expected range in the S&P for the balance of the year should be between 1700 and 1925. With the S&P now at 1850, the risk (150 S&P points) exceeds the reward (75 S&P points) by a factor of 2 to 1.

While I expect equities to be down by 5% to 15% in 2014, I am uncertain as to the timing of a potential downturn.

At best I view 2014 as a year of subpar returns. At worst, a cyclical bear could lie around the corner.