The following commentary is from an investment professional with Clear Harbor Asset Management who is a participant in TheStreet's expert contributor program.NEW YORK ( TheStreet) -- We've now seen earnings results from the vast majority of companies in the S&P 500 for the fourth quarter of 2011, and the overall results show the first real slowdown in growth that has been recorded in years. After eight consecutive quarters of double-digit earnings growth for companies in the S&P 500, growth in the fourth quarter of last year slowed to 6.1% as of Friday, according to FactSet. If results from Apple ( AAPL) and AIG ( AIG) are excluded from the calculation, growth nearly stalled at 1.1%.
Domestic economic reports have shown real signs of improvement lately, particularly in the all-important employment data. Our economy desperately needs continued improvements in the job market, which would likely lead to stabilization in our all-important housing market -- a key engine of economic growth that has been a painful drag on the U.S. for a long time now. Rising oil prices and other problems abroad could certainly derail these trends, but the U.S. also looks well-positioned to serve as a safe-haven for investors globally in the event of a real blow-up in Europe or Asia, which could help keep us afloat. The most promising sign for me is that even despite the recent rally in U.S. stocks, relative valuations remain reasonable -- even conservative. The forward-looking price-to-earnings ratio on the S&P 500 was 12.8 as of Friday, according to FactSet, which is well below the prior ten-year average of 14.6 but above the reading at the beginning of this year, which was 11.8. In late February, when the S&P was at around 1,357, Bloomberg News reported that corporate earnings were rising faster than the S&P's price level, despite the index's best January performance in 15 years. At that point, the S&P's overall price-to-earnings ratio was lower than it was last April, according to Bloomberg, and now it's trading lower -- recently down to 1344. Analysts can slice and dice the data in a myriad of ways showing different results, and I've read rational analyses arguing that stocks are actually more expensive than they appear, but nonetheless, I'm not sensing much irrational exuberance in stocks these days, and I don't see it in the data either. Investors -- blind-sided by the financial crisis of 2008 -- remain cautious to this day, and that is a good thing. Just as there were plenty of good reasons for caution in 2007 and 2008, there are plenty of good reasons for caution now. The difference between then and now is that the investment community is heeding those reasons for caution, and as a result, prices generally are much more reasonable. That bodes well for the long-term investor. Disclosure: Worden and/or his firm hold positions in AAPL, AIG, CAT, DOW and MMM.