Barron's Online Has Scott Black's Late-Summer Picks

Scott Black is one of Barron's annual Roundtable participants. Barron's Online has a Q&A with him about the state of things as August is coming to a close. Asked about what's out there:

It's getting increasingly difficult to find cheap stocks. What concerns me is, we're back over 1,000 for the [Standard & Poor's 500 Index], and if you use a bottom-up estimate, of $54 [per share in earnings for S&P companies this year], that's an 18 multiple, possibly a 20 multiple. On a pure multiple basis, this market is full.

More:

The second thing that concerns me is there's been a major disconnect between the stock market and the economy. Look at the Market Laboratory [in Barron's magazine]. Take your pick of the data -- retail, wholesale, industrial. It may be that things aren't cropping the way they were at the beginning of the year, but it's not like industrials are taking off, either, or home sales taking off. The numbers are still disastrous year over year.

President Obama hasn't put anybody to work. When he came in, he quoted Henry Morgenthau [U.S. Treasury Secretary under Franklin Roosevelt] as saying the best economic policy is a job. Until you put people back to work, consumer confidence isn't going to improve. Industrial capacity utilization is at 68.5%, one of the lowest since 1946. The rotary rig count [a measure of drilling for new oil wells] is down from 2,400 to 1,138 in one year. Wholesale sales are down, retail sales are down. These things have just dropped off the cliff.

Bill Buckler of The Privateer has been among those banging the drum about the bad sign of US industrial capacity being in the 60-some percent range.

For me, I'm not going to say there's nothing worth buying here. But just about everything is fairly valued or overvalued. Patience seems warranted.

Comments

[Daniel M. Ryan]

It's hard to wait sometimes, but now would be the time to wait. "The turkeys are flying..."

[John]

@Daniel: I'd maybe make a lateral move...but you're right. Time to sit tight.