| Page 2 of 2 < |
Dow Closes Above 14,000
|
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
Stocks, while moving higher, are still trading at reasonable prices, analysts said.
"There's lots to like still -- that's what keeps it going higher, " Paulsen said.
Still, some analysts cautioned that the shakeout in housing is far from over. Problems with subprime mortgages, or loans made to home buyers with shaky credit, will affect more than just Bear Stearns, they said. In two days of congressional testimony that ended Thursday, Federal Reserve Chairman Ben S. Bernanke cited estimates that credit losses related to subprime mortgages could reach $100 billion.
Subprime-loan troubles have also put into question the continuing access to cheap money. A global low-interest environment and investors' willingness to take on risk have fueled corporate dealmaking. The leveraged buyout boom, in which private-equity firms rely on generous credit conditions, buy companies and load them with debt to pay for the acquisitions, has been a main driver of stock prices. But investors have resisted several loans and bonds floated for such deals, demanding better terms.
Access to low-interest loans have also played a role in the rush of corporate buyback of stocks because some companies are using borrowed money to buy their shares.
"The market can stay irrational longer than you can stay solvent," said Axel Merk, manager of the Merk Hard Currency Fund.
The question, Merk said, is whether these are just road bumps or signs of larger problems.
"I think people are misreading that we've just had a little hiccup," he said. "I do think that it will take a while for the market to come to terms with that. . . . I am rather concerned that we're more in a 1987 scenario and not in a Goldilocks world that will go up forever."
