Weekly look ahead

This week will see the avalanche of quarterly earnings start in earnest. It will be interesting to see how investors react: S&P 500 growth in the first quarter is currently forecast at 3.3 percent, according to Thomson Financial. That's the worst its been in 3-1/2 years and far below the historic average. Even if they come in around 6% (which I consider more likely), investors may start to feel the cold reality that the rapid economic expansion is cresting.

Either way it seems safe to observe that stock valuations should face rough seas in the next 6 months as people used to 12-14% constant growth start to see 6% and less. Some observers have argues that cash flows demonstrate there is still money on the sidelines waiting to be invested (like much of mine) but I would caution that getting in at the top is not a wise thing to do. Even if the market goes up a few percent, I expect that a good cash account (returning about 5%) is a better place for your money than the market over the next year or so.