Jeff Saut: Cautious Short-Term, Bullish Long-Term ~ market folly

Wednesday, March 24, 2010

Jeff Saut: Cautious Short-Term, Bullish Long-Term

It's been a while since we last checked in on Jeff Saut, Chief Market Strategist for Raymond James. So today we're looking at the latest market commentary from him entitled, "Catching Pigs?!". (An aside: Saut almost always has odd titles for his investment strategy publications, have you noticed that?) At any rate, he notes that,

"Currently, however, the U.S. equity markets don't 'see' the potential for a lower structural growth rate, and lower P/E ratio, as the Dow Theory 'buy signal' of last year was reconfirmed last Wednesday."

What's fascinating here is that the Dow has now regained over 50% of the points that were lost back in the market's decline from late 2007 to early 2009. Saut makes special note that yes, the market is overbought. This is something we touched on yesterday with Jim Rogers' commentary as well. However, this overbought status has been overridden by momentum to the upside. No one can guess when this momentum will secede and therein lies the problem. Looking longer-term, Saut still believes this is the typical economic cycle (corporate profits surge and then inventory rebuild occurs).

He is cautious in the short-term but still likes accumulating strong stocks (preferably with dividends). He tosses out ideas such as Century Tel (CTL), Leggett & Platt (LEG), and Brinker (EAT). This meshes with what we've seen out of prominent hedge funds that also currently like high quality stocks.

Embedded below is the latest investment strategy from Jeff Saut:

You can directly download the .pdf here.

Interesting as always to hear the latest thoughts from their Chief Market Strategist. Be sure to check out Jeff Saut's 2010 market outlook as well. And for more research out of Raymond James, we've compiled their list of analysts' best stock picks for 2010.

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