Jeff Saut, chief investment strategist at Raymond James, says now is not the time to be heavily short stocks because they finally do look cheap:
Verily, for the first time in my 10-year stint at Raymond James I can finally say that stocks, in the aggregate, are “cheap.” Cheap on a price-to-earnings basis, cheap on a replacement value basis (Tobin’s Q), cheap on a cash flow basis, cheap on a dividend yield basis, and the list goes on. Further, followers of our work know that since July, when correlations that have worked for years ceased working, we have likened the environment to that of the 1937 – 1938 stock market decline. Like now, there was nowhere to hide in 1937 except cash, Treasuries and/or “short” of stocks. Also like now, the authorities did everything in their power to stem the stock slide. Unfortunately, none of their attempts worked until the DJIA had lost nearly 50% of its value and there was nobody left to “sell.” Hopefully, that is where we are currently. And while history doesn’t necessarily repeat itself, it does often rhyme.
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