Dow Jones Fair Valuation Model - 13,500 - gregdonaldson

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1 pt	Dow Jones Fair Valuation Model - 13,500
	Sep 03, 2008 09:26 PM UTC

gregdonaldson

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Symbol	Sentiment	Start	Return	Closed
DIA		09/03/08	-23.66%	--

Via Donaldson Capital: Rising Dividend Investing:

How cheap are stocks? You don't hear that question often these days, but we believe that is the appropriate question to ask as we pass through the one year anniversary of the subprime crisis.

Bank write offs have been staggering and many analysts believe some of the write offs will later be recaptured as the markets unfreeze and normal business activity returns to banking and real estate. Even if earnings are not recaptured, losses at some point will cease and the banks will again begin reporting earnings, thus the earning we are seeing today for the major indices are understated significantly from what they are likely to be two to three years down the road.

Having said this, we believe the Dow is undervalued even using 2008 projections for dividends and earnings. We have computed the "fair value" of the Dow Jones Industrials using current data from S&P on 2

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