Radio Rallies & Reversals

According to Richard Russell, the 86 year-old writer of the Dow Theory Letters and financial icon, "Stocks are not priced to produce profits over the coming years." Looking at historical dividend yields as far back as the Great Depression, an overall dividend yield today of below 3.5% is not only risky, but dangerous. I can't say that I disagree, but what makes it difficult to read the tea leaves is all the government and central bank intervention - Expect dividend yields in the short-term to go lower yet.

I'll close by sharing David Rosenberg's top then themes for 2011:

1. Taking a contrarian view, the outlook for the first of is negative;
2. Global growth is going to slow, so be cautious with your cyclical exposure;
3. Soveriegn debt issues aren't going away - Expect volatility to intensify;
4. The US$ will strengthen against the Yen and Euro;
5. Emerging markets will struggle as central bank try to curb inflation;
6. Bonds will enjoy positive returns;
7. The CDN$ is overvalued;
8. Deflation is still a risk;
9. Corporate bonds are no longer cheap, but focus on the mid part of the yield curve and credit spectrum;
10. The biggest macro risk is another leg down in home prices.

GB