Market Still at Fair Value
We think 2010's stock rally has been justified by the fundamentals.
Investors in 2010 weren't treated to the rollercoaster volatility that the markets experienced in 2008 and 2009. It was hardly a sedate year to be sure, with some bumps along the way, but one thing remains the same now as it did 12 months ago: Stocks on the whole remain fully valued.
Although the recovery has been halting at times, it appears to be firmly in place. The Morningstar U.S. Market Index is up 14% over the last 12 months as mostly positive economic data and corporate earnings continued to roll in. At the same time, our team of equity analysts has raised their fair value estimates as the prospects for the firms they cover brightened. The rally has been justified by improving fundamentals.