Scott Black on the Markets and Economy

Scott Black of Delphi Asset Management is one of the most highly regarded value investors in the market today. He was just interviewed on Bloomberg News and made the following assessments:

1. the economy can not substantially recover with a high and increasing unemployment rate.

2. there is a current disconnect between equity market performance and economic data.

3. stocks are NOT “once in a lifetime” bargains at current levels.

4. investors are “grasping at straws” chasing the market higher.

5. future earnings for the S&P 500 are $43 on a top down basis and $54 from a bottom up standpoint. At yesterday’s closing level of 945 on the S&P, those earnings equate to price multiples of 22 and 17.5 respectively. Is that rich, cheap, or fair? Rich.

6. Over and above the fact that the market looks rich at current valuations, the S&P 500 has an 11-12% weighting in financials. Black maintains that we can not properly evaluate the earnings of financial firms under the relaxed mark-to-market accounting. (Please see my earlier post, Wall Street-Washington: “Pay to Play”)

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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