Six-Year High

The S&P 500 rallied to its highest close since November 8, 2000. If you recall, that was the day after the election when we were trying to figure out exactly who won.
Since July 17, the S&P has climbed 14.1%. Our Buy List has done a little better, rising 15.5%. Remarkable, the P/E ratio for the S&P 500 is still lower than it was in May. Since late-June, the yield on the 10-year bond has dropped 81 basis points, from 5.24% to 4.43%. I don’t see how this rally can end just yet. But it probably needs to take a rest soon.
Two quick things to mention. Medtronic (MDT) said that it’s going to spin off its external defibrillator business. This should happen some time next year. Also, UnitedHealth (UNH) announced that it has a new CEO. Stephen J. Hemsley has replaced William McGuire who was embroiled in the stock options (ahem) “scandal.” The stock is now going for about 14 times where the company sees next year’s earnings. Honestly, UNH hasn’t been this cheap in years.

Posted by Eddy Elfenbein on December 4th, 2006 at 8:57 pm

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