By Dan Weil
Economist extraordinaire Gary Shilling says that a sharp drop is in store for stocks, thanks to continued economic weakness.
“We think that you’ve got to approach things very cautiously,” he tells Yahoo! Finance.
With the recession running at least through next year, Shilling anticipates earnings of $40 for the S&P 500 Index.
“Normally at the bottom you have a 10 or 12 multiple on that,” he explains.
“With low interest rates, 15 is probably possible. That would put you at 600 on the S&P 500.”
Indeed, that’s Shilling’s target, which represents a 32 percent drop from current levels.
more in:
http://moneynews.newsmax.com/streettalk/shilling_stock_plunge/2009/05/15/214869.html
Ruin-Nation
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