Talk about a contrarian viewpoint. Neil Hennessy, chief executive officer of the
While others are foretelling a recession sparked by defaults in subprime loans and a deteriorating credit market, Hennessey said, “I don’t see anything to hold back this market except excuses. Earnings are increasing, there are plenty of jobs out there, and the economy is still in great shape.”
Indeed, the economy grew 4% in the second quarter, buoyed by business spending and exports. In the first quarter, it rose a scant 0.6%. Hennessey said that the Dow is undervalued because the average price-to-sales ratio of companies in the index is $1.27, whereas he values it at $1.50.
“No one is believing that we are in a bull market, but just take a look at the numbers out there,” he said.