There’s been a number of articles in recent weeks about how the markets are approaching fair value. Here is the latest by somebody who knows about bubbles — the infamous Hentry Blodget. The article looks at the S&P relative to “cyclically adjusted” PE. Key points:

1. Fair value on S&P between 850-1050
2. Markets overshoot fair value on the way up AND on the way down

I could not agree more with point #2. I’ve been trying to put together a buy list for stocks that I can hang onto for the long run, but I’ve been having a lot of problems. I can’t find many that strike me as cheap. They may no longer be expensive but as far as Canada is concerned, I would not touch bank stocks into a deteriorating economy and commodity producers low P/Es are misleading. I don’t care about fairly valued. I want bargain basement. I want stocks that pay me for the risks should this recession prove to be deep and long. Ideas are welcome…

UPDATE: Great chart that also shows that things can be bad for a very long time…