If I can pull this off, I’ll pay for lunch on this one.
I admire two organizations: the Hussman Funds and CrossingWallStreet.com. Both live near me. They have different views on whether the market is overvalued or undervalued.
Take these two posts:
The first was Eddy’s post indicating that the market is cheap on a forward earnings basis. After I read this, I prompted my Bloomberg Rep to show me data on market-wide Price-to-Sales ratios, because profit margins could be unsustainable. While I did that, William Hester, who I have met at a BCFAS meeting, commented on the very item I was looking for — if the profit forecasts occur, profit margins will be unusually high.
Having been burnt on unusually high profit margins before, I am inclined to be more conservative about future profit margins now.
But for fun, Eddy and William (and if you can bring along your bright boss John), I am willing to have a lunch discussion of these issues at a nice restaurant in Howard County. Let me know if you have interest.