5 Reasons Stocks may be Undervalued

Last Updated Sep 6, 2011 2:51 PM EDT

It's very unlike me to be an optimist. In fact, earlier this year, I wrote 5 reasons stocks are overvalued, which were:
  1. Stocks have recovered but the economy hasn't.
  2. Stock prices have increased 106 percent.
  3. Experts were predicting a great 2011.
  4. Money was flowing back into stock mutual funds.
  5. Bonds scared me as rates can't fall below zero.
Obviously, four out of five of these signs are no longer the case. And though I'll offer my usual disclaimer that this is not a prediction, there are some very hopeful signs that are giving me courage to buy into this stock market now.

Here are the five reasons I'm turning into an optimist:

Turn the page for reason 1: AFTERSHOCK

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.