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EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Kass: A Wolf in Sheep's Clothing

Stocks in this article: WFCTIFAROGSSPY

Valuation Is Volatile

Valuations are not demanding but, at the same time, are certainly not undemanding.

My ursine tone is also a reflection that, by most measures, the U.S. stock market is not meaningfully undervalued (against consensus forecasts) and that given the dynamic of the headwinds of slowing economic growth, a poor profit outlook and the developing weakness of policy are unlikely to be revalued upward in 2013 (as many strategists suggest).

Should my well-below-consensus corporate profits forecast be realized, current valuations could be viewed as more demanding than is generally assumed. And kicking the fiscal can down the road is not supportive of a 15x P/E ratio.

At the time of publication, Kass and/or his funds were short GS and SPY, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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