Wall Street shrugs off January job losses of 598K - Yahoo! Finance

This is easy. Terrible job losses were already priced into the markets. Which is a fundamentally good thing: It means that the markets have mostly corrected for the present economic situation and that we may have hit something resembling a floor. God willing. I’m buying.

Here’s the thing. The S&P 500 is at about 870 right now. 2008 earnings will end up at about $48. That’s a P/E of 18. The average analyst estimate for 2009 earnings is about $42. That’s a P/E of 21. The long term average is 15. [data here] I think it’s much more likely that the market over shoots on the downside to 10 or 12 (420 to 500 S&P). Could it go up from here? Of course. But it’s pretty dependent on the speed at which earnings recover. I also think there’s more potential downside to the broad market than upside. There’s certainly value out there but buying the broad market looks risky to me.