Howard Marks: U.S. equities may face a "day of reckoning

well, a day of reckoning isonly in the offing, the onlyquestion is where and whatlevel, share prices precarious?i think that quote wasreferenced the fact that nobodycan expect something to workforever and what happens usuallyis that the better somethingdoes the more people expect fromit, well, if something doesreally well, boros from thefuture and shouldn’t expect itto go on forever, always a dayof reckoning, when things reachexcess.the question is are we therenow. are we? i don’t think so most areas,not at excessive levels, atbubble levels, you think back to2000 when the stock marketreally began its decade ofmalaise, the s & p ratio was 32today, roughly half that, inline with the postwar averages,you can argue it is high they’retop should be, the growthoutlook not what it used to be,still, 16 or 17 pe ratio a farcry from 32.i would say that the prices ofmany assets today i woulddescribe as being on the highside of fair, not excessive andnot involving territory. people talking about thepossibility of multipleexpansion, luke at whereinterest rates are, where youthink earnings are going to be,some people more optimisticwhere we can go. that’s right.although i am not a raving bullon the economic outlook for theunited states, i still believethat there’s a chance that thiseconomy kind of catches.to me, it feels like amotorcycle you’re trying tostart, not quiting so we havetwo steps forward and one backand two steps forward and oneback.one of these days it couldcatch, you know, with the shaledevelopment in energyindependence, lower costs,increased strength inmanufacturering, 401(k) and homeappreciation making people feelwealthy and spending more money,it could become self-feeding ina positive way.i’m not — this is not aforecast, i’m saying there is apossible that it does betterthan i think.but, you know, the expectationsare modest, which means thatthere is room for surprise onthe upside.