Market Indices—February 18, 2010
S&P 500: 1,106.75
90-day T-Bill: 0.09%
10 year Treasury Note: 3.81%

The markets have come a very long way from their lowest levels set back in the dark, desperate days of March 2009, erasing earlier losses and leaving the indices ahead by a substantial amount for the year.  That’s the good news/bad news story of this newsletter, for as we predicted in our spring newsletter last year the markets have performed much better than the economy.1 The dramatic appreciation in the stock and bond markets leaves them both overvalued – and the bond market especially so – in our opinion; and against a backdrop of still very shaky economic conditions, we think it is a time to err well on the side of caution in our portfolios.

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