"He who lives by the crystal ball soon learns to eat ground glass." -- Edgar R. Fiedler, "The Three R's of Economic Forecasting -- Irrational, Irrelevant and Irreverent"My starting point when I construct my portfolio and determine exposures is always valuation. I fully recognize that modeling an S&P 500 price target implies a degree of precision in an imprecise world. More often than not, markets overshoot, both to the upside and downside. Nevertheless, while our exercise and process are not intended to be an exact science, this sort of methodology eliminates emotion and has historically added value as an investment discipline.