♫ Deck the hall with boughs of folly, fa la la la la la la la la; ‘Tis the season to be folly, fa la la la la ♫. Folly from our congressional leaders continues unashamedly. They’ve made January’s alleged fiscal cliff out to be an abominable snowman of sorts, when it actually looks to me like a Fiscal Bluff. My bet is this folly/bluff is nothing more than political grandstanding and neither party has a winning hand. Is it risk-off high stakes or risk-on business as usual? Is it conservative sneers or progressive jeers; are things getting better or are they getting worse?
What ails the economy has been well telegraphed – there are fewer unknowns for investors to fret than knowns. I say with 21 days to go, call the bluff and lay your money down. Shakespeare said, “More matter with less art.” In other words just the facts – The Dow Jones Industrial Average closed last week, up .62% to $13,155. Earnings in the next 12 months are projected to grow by high single to low double digits; the DJIA’s P/E is currently 14.6, forecasted to 12.5 in the next twelve months (historical P/E averages have been in the 15-17 range on forward 12 month earnings). That’s a 15% discount from the mean, in a minute