The first quarter of 2006 is over. Now is a good time to reflect on stock prices and the opportunities they present.
Bargains are scarce. Equities are expensive. In recent weeks, Ive heard several fund managers say valuations are still attractive. I dont agree. Generally speaking, valuations are unattractive. Returns on equity are higher than historical levels. A market-wide return on equity of 15% is unsustainable. Price-to-earnings ratios may not fully reflect how expe…