Stock Market -- Investing

I regard investing in stocks as an enterprise with a minimum time frame of 5 years. I am not a
buy and hold advocate. Never have been. An investor should add to commitments when the
market is cheap up to reasonable and lighten positions when the market gets expensive.

There was no investment case to be made for stocks from the latter part of 1996 until the
end of 2008 in my view. I think there has been a good case for long term investment over
most of the past 18 months, with the early 2009 time frame the best time to invest for the
longer term since the early 1980s. As all know, the market has improved dramatically and
quickly since early last year, and although stocks are now far from cheap, I regard the market
as still being reasonable.

I am primarily a trader, but if I was a long term player, I would not be uncomfortable
making new commitments up to SP 500 1240 over the next year or so. That level works out
to 16 x long term trend earnings and about 14 x projected 2011 eps for the "500". If I was
only a long term player, I would be reluctant to add to holdings above the 1240 area. There
could be good trades from that level, but I think true longer term players should wait for
significant dips before committing.

My SP 500 Market Tracker has the SP 500 fairly valued at 1470 for year end 2011 on
a continuing but far less dramatic recovery of earnings to $89 per share. I watch the
performance of earnings in the context of a long term, static channel, and because of the
cyclicality of profits, I grow progressively more cautious about the market as earnings
expand up to the top of the channel or exceed it. Such happened over 1997 - 2001 and
again over mid 2006 - late 2007. The next challenge to the top of the eps channel would
appear to be several years away. I also keep an eye on the long term price channel
running back over 60 years. The channel top for 2011 for the SP 500 is about 1500 and,
in my view, long term players might use the 1450 - 1500 level to lighten the commitment
to equities should the market do that well.

Since investors have all manner of objectives, I never presume to offer advice. I let you
know my views and leave it to you decide whether the perspectives are of use. I would
say my strategies for longer term commitment to equities have been conservative and sound,
but do not register at all well with players who try to use market timing or trend following
in making longer term investments.