Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Christine Benz and Jeremy Glaser | 03-07-2013 03:00 PM

The Friday Five

Five stats from the market and the stories behind them. This week: The Dow hits a new high, potential M&A deals continue, Dell's buyout gets activist pushback, and more.

Christine Benz: Hi. I'm Christine Benz for, and welcome to the Friday Five. Joining me to discuss five key numbers from the past week is Morningstar markets editor, Jeremy Glaser.

Jeremy, thanks so much for being here.

Jeremy Glaser: You're welcome, Christine.

Benz: So, what do you have on tap, Jeremy?

Glaser: We're going to look at the number 2007, $115 billion, EUR 561 million, 10%, and finally $9.

Benz: 2007, Jeremy, I’m guessing that relates to the fact that the Dow Jones Industrial Average found its way to a new high this past week.

Glaser: Yes, it did. This is something that we had kind of seen coming. The Dow has really been on quite a run for years now, and it's clear that it was just a matter time before we kind of recaptured that, at least that nominal high. I think the story certainly created a lot of headlines, but it doesn't really say a lot for investors. Like I said, it's just a nominal high. We can take inflation into account; we’re still not quite back to that level. And it's difficult to compare the world in 2007 with the world today. And I think investors need for main focused on what are the fundamentals behind the market, and what does that mean for potential future returns, more than worrying about where it is kind of on a historical tally card.

Corporate fundamentals are much stronger now. We have more corporate earnings, kind of, supporting that index now than we did. We think stocks are almost exactly fairly valued right now. There don't seem to be a lot of big bargains, but equities aren't in this enormous bubble and that was what [many people thought was] kind of propelling the indexes forward. And there are some fundamental reasons, from strength in the U.S. economy, we see the housing market really starting to turn around, and there's kind of that slow growth in employment from the Federal Reserve’s policies of the easy money policy kind of helping pop up equities there.

So this doesn’t seem like a situation where just because we’ve reached that high, we need to either celebrate that the recession is over. Obviously, we're still in this slow-growth mode, and that's going to be something we're grappling with for a while. And it doesn't mean we're in a huge bubble and that you should sell all your stocks. I think the idea of having a reasonable asset allocation, thinking about stocks as a long-term investment, there are a lot of worse things in the world than owning some of these great companies at a fairly valued level. And that's where investors should be focused on, that valuation and those fundamentals and less on whatever that headline number is.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article