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Quarter-End Insights

Our Outlook for the Market

After the downdraft from late April to early June, valuations in general now appear more reasonable.

The stock market was looking a little expensive to us a few months ago. But after the downdraft from late April to early June, valuations in general now appear more reasonable. We still think buying opportunities are more likely to be found among wide-moat companies--the subset of firms we cover that we believe hold especially strong competitive advantages.

That's the basic message in our latest quarterly review. Morningstar analysts cover nearly 1,700 companies, and we develop sector and overall market reviews each quarter. At the end of the first quarter of 2010, the median price/fair value ratio for our coverage universe had risen to 1.05, suggesting that our analysts believed the market was at least fairly valued, if not a little expensive.