Jim Paulsen, Author, Paulsen Perspectives, explains why he thinks stocks have even more room to run.
Transcript:
CAROLINE WOODS: As the stock market sits near record highs, my next guest says there are still plenty of relatively cheap stocks out there. Jim Paulsen is former chief investment strategist at Wells Fargo and author of Paulsen Perspectives. Jim, Thanks so much for joining us.
JIM PAULSEN: Well, Thanks for having me.
CAROLINE WOODS: So, Jim, fill us in. Where are you still finding value amidst these record highs?
JIM PAULSEN: Well, I guess I’m mostly attracted just to the amount of, this has been a very narrow bull market, Caroline. And the amount of parts of the S&P 500 that are still relatively cheap, I think is rather outstanding when we’ve had such a prolonged bull market now and we’re near record highs. I recently looked at the 72 sectors or industry groups that make up the S&P 500 back to 1990, and I looked every month at the relative price earnings multiple of each of those 72 sectors and calculated what of them are below average. Right now, as opposed to its average over the entire period. And I looked at that every month since 1990. And today we’ve got more than 76% of the sectors relative peace or below average within the S&P 500. And that’s, that’s more than 76% of the time since 1990. There’s only been one other brief minute, really, when there were more sectors below average in terms of relative peace than there are today. So I think there’s a lot. What’s interesting about this, you can look at the market being narrow as a sign of a weak market as some do, or you could look at it as a sign that there’s so many parts of this marketplace that have yet to be used in this bull market. And maybe they could catch fire in the latter stages here and keep this stock market alive. So just in general, I think there’s quite a few sectors I could get into. Get into a couple of the main sectors I’m most interested in. If you want to get into those sectors, please.
CAROLINE WOODS: What are some of the value sectors right now? Because we have seen more participation, if you will, outside of tech. We have industrials higher, utilities higher. So it isn’t just a tech rally. But to your point it hasn’t been as broad based. So tell us some of the value sectors you found……
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