In Search of a Buyable Panic Point
NEVER MIND GRAHAM AND BUFFETT and Lynch and Soros. In times like these, traders look for guidance in Rudyard Kipling, seeking to be one of the few to keep his or her head when all about them are losing theirs.
For this to work, of course, signs of others' taking leave of their senses must become evident. Thus we witness the search, after a quick 8% spill in the indexes and a halting recovery, for proof that madness and panic are everywhere. No one wants to be the capitulator yelling "get me out." Everyone hopes to be the "capitulee" declaring "the bottom is in."
The indexes surrendered few clues last week about whether such a buyable panic point had been reached, doing very little from starting gun to finish line. The Dow industrials eased 25 points to 10,989 and the Nasdaq dipped 8 to 2121.
The Standard & Poor's 500 lost 7 to finish at 1244 -- a fraction below where it ended 2005. Depending on who is doing the talking, 1244 is either an important support level, a point of vulnerability for the benchmark, or the winning numbers for the New York Lottery's Win Four drawing on Monday.
As there were a week ago, markers of negative market sentiment are numerous. The percentage of bulls and bears in the weekly Investors Intelligence survey last week was exactly equal, at 35.6%, the sourest reading since all the way back at the October 2002 bear-market lows. The Ned Davis Crowd Sentiment Poll got below the depths of last October, at levels last seen in the summer 2004 selloff.
These things are reassuring the would-be cooler heads, and perhaps will insulate the market from any nasty downside follow-through until some of that pessimism is burned off with either a market bounce or simply sideways movement. It's now the point where stocks should rally very soon if they're going to.
Wednesday's decent one-day pop beguiled those who want to believe in a summer rally, as well-received earnings from Morgan Stanley (MS) and FedEx (FDX) provided a nice excuse to enter bids. This raised hopes that, if the indexes can firm up through the quarter's end and the start of earnings season, the macro focus could give way for a while to profit news and conference calls. The rough pattern has been that market weakness ahead of earnings season often gives way to some relief.
This would all combine to create a compelling story if we were still in the gently upward-trending, range-trading environment that prevailed until early May. By the rules of that period, this would represent a low-risk dip-buying opportunity. But, as Sandy Ward discusses on page 18, according to a clutch of seasoned market diagnosticians, the odds have risen that we've entered a bear market of some description, one where investors should quit worrying about "upside risk" so much.
The key is to make sure that one isn't playing checkers -- which involves only offense or evasion -- when the game has changed to chess, in which smart defense is prized.
The market hasn't yet told us enough to say for sure that this is the case. And no matter what, a rally of a few percent from here wouldn't swing the verdict in either direction. Let's repeat the suggestion from last week here that a drippy summer, "boring at best," wouldn't be so bad in the grand scheme. In that case, Friday's low-volume non-event of a day, when the S&P 500 crossed the flat line 13 times, might come to seem familiar.
ARGUMENTS MAKE MARKETS, and scanning mainstream Wall Street opinion turns up plenty of points of disagreement. Would-be opinion makers differ on when the Fed will stop tightening, on whether it would be a good thing, on the ultimate direction of bond yields, and on which sectors look most attractive. But there's fairly broad agreement that big stocks are cheap, or at least attractively valued.
A few observations here: All contentions about stocks' cheapness are relative, usually anchored in the last decade's experience. In that context, valuations are undemanding. The S&P 500's present price/earnings ratio of 14 times the next 12 months' forecast earnings is as low as it's been since late 1995.
Since '95, of course, we had a monumental inflation of stock valuations -- a perhaps-unprecedented high in risk appetite -- followed by years of multiple compression. Where it ends, nobody knows.
It's also true, though, that today's lower forward valuation is a byproduct of the market-cap weighting of the S&P 500 and the sector breakdown of the index. Mega-cap stocks are cheaper than the market, for sure. But the median stock's valuation remains high by historical standards. That makes the giants poised to do better in a weaker market environment, if not to lead the way higher.
Perhaps less understood, the traditionally lower-P/E sectors are responsible for most of the earnings, and most of the earnings growth, of today's market.
Of the 10 S&P 500 industry sectors, only three -- financials, energy and basic materials -- have P/E ratios lower than that of the overall index. Financials are at 11.6 times forward 12-month estimates, energy at 9 and materials at 13.8, using numbers from S&P and Thomson Financial. Those three sectors account for 44% of the index's total projected earnings, and 56% of forecast earnings growth.
Valuation in itself won't be the proximate reason the market streaks to new lows, if it does, nor will it cause any major rally that might arise.
But it provides the context for expected returns. And given where the growth is, it should surprise no one if valuations stagnate or continue to compress and returns disappoint.
在慌乱中搜寻买入良机
别管格雷汉姆(Graham)、巴菲特(Buffett)、林奇(Lynch)，或者索罗斯(Soros)了。这种时候，交易员们往往要从吉卜林(Rudyard Kipling)所著的丛林小说里寻找灵感，试图在一片混乱中保持难得的清醒。
不过，要做到这一点，首先要证明众人都已慌乱不知所措。所以我们寻找证据，在主要股指暴跌8%，反弹嘎然而止的这场纷乱中寻找处处都是恐慌和失去理智的证据。没人想成为大喊求助的被套者；人人都想胜出，大声宣告：市场已经触底。
上周主要股指的表现并未就大盘是否达到了这个可以买进的恐慌点做出解释，从头至尾毫无方向。道琼斯工业股票平均价格指数上周累计下跌25点，收于10989点；那斯达克综合指数跌8点至2121点。
标准普尔500指数下跌7点至1244点──已经跌破2005年年底的收盘点位。至于1244点是一个重要的支持位，是一触即溃的点位，还是今天（周一）New York Lottery开出的Win Four大奖的数字，那就要看是谁在解释这个问题了。
与一周前一样，负面市场情绪的制造者数不尽数。上周Investors Intelligence调查得出的看涨和看跌派人数比例恰恰相同，都是35.6%，创出了这项调查2002年10月份熊市低点以来的最低读数。Ned Davis Crowd人气调查得出的数据也低于去年10月份的表现，与2004年夏季抛售浪潮时的读数相近。
这些数据都会让逐渐冷静下来的投资者感到安慰，也有望让市场不再经受大规模的后续抛盘，直到市场反弹或者盘整震荡消除了部分看跌情绪。现在的点位正好是股市应该很快反弹的起点，如果能反弹的话。
上周三的大好涨势给那些希望相信夏季牛市的投资者提供了很好的理由，摩根士丹利(Morgan Stanley)和联邦快递(FedEx)的出色业绩也是买进的好理由。这让大家更加期待大盘股指能坚持到季度末，一旦收益季节开始，市场关注焦点就会转向利润消息和讨论业绩报告的电话会议了。收益季节开始前的低迷市态往往都会在收益消息提振下略有好转。
如果5月初之前的温和上行趋势加区间震荡格局仍在继续发展，那么结合以上表现来看，市场走势就非常令人振奋。根据那段时间的规律，眼下正好是一个难得的低风险逢底买进的机会。不过，根据资深市场分析人士的判断，我们进入熊市的风险也大大提高了。投资者也许应该及时撤出。
问题的关键是，我们要确定对大局的判断没有失误。如果是西洋跳棋的棋局的话，我们只考虑进攻或撤退；但现在时局已经演变成国际象棋的棋局了，这时明智的防守会有所斩获。
市场并未告诉我们足够的信息，让我们断定现在是国际象棋的棋局。但无论如何，如果股指只从目前点位反弹几个百分点，我们难以对市场走向作出任何判断。在这里我们想重申一下上周的观点，沉闷的夏季在总体上不会太糟糕，“充其量是单调。”在这种状况下，上周五交投清淡、消息面波澜不惊的日子可能多次重现，标准普尔500指数上周五13次穿越前收盘点位。
市场对后市走势争论不休，华尔街的主流观点也众说纷纭。预测人士在Fed何时停止加息、加息是否是件好事、债券收益率的最终走向、以及哪些行业看起来更有吸引力等诸多方面存在分歧。但有一点基本能够得到大家的共识：大型股股价低廉，至少在估值上颇有吸引力。
一些观察人士指出，所有对于估值是否低廉的结论都是相对的，通常是基于过去的经验得出结论。而根据过去的经验判断，现在的估值很低。基于未来12个月的预期，标准普尔500指数的本益比为14倍，为1995年末以来的最低水平。
当然，自1995年以来，我们遇到了不同寻常的股价高估现象──投资者的冒险情绪达到了史无前例的程度──接下来的几年就出现了估值压缩。至于这种估值压缩何时会结束，没有人知道。
不过，今天的低估值是许多因素共同作用的结果，例如标普500指数的市值权重，该指数成份股中各个行业的分配等。的确，大型股估值比市场总体水平低。而以历史标准衡量，中型股的估值仍然很高。因此即便这些特大型股不能引领市场走高，也会在市场疲软的环境下呈现突出表现。
或者更加直接一点说，过去的低估值行业正在为市场贡献著大部分收益，也是推动收益增长的主力军。
在标准普尔500指数的10个行业中，只有3个类股──金融、能源和基础材料类股──呈现出低于该指数整体本益比的估值。标准普尔和Thomson Financial的数据显示，基于未来12个月收益预期，金融类股的本益比为11.6倍，能源类股为9倍，基础材料类股为13.8倍。这3个行业占该指数预期总收益的44%，占预期收益增长的56%。
估值本身并不会成为市场创下新低或引发反弹的关键原因。
但它提供了一个预期回报的总体状况。而且既然我们已经知道了增长的主要领域，那么估值继续萎缩或者回报率不尽如人意也就不足为奇了。
