The folks at Ariel Investments think so. MTV accounts for just 13% of Ariel's estimate of Viacom's value, according to Ariel's analysis of Viacom , released on Nov. 13. (Viacom is a holding in the Ariel Appreciation Fund.)

And Viacom's filmed entertainment business "also receives a disproportionate amount of attention," Ariel says. That unit, which includes DVDs, generates 40% of the company’s revenues, but it accounts for only 4% of profits because of its low margins. "Investors focus on the near-term headwinds of declining DVD sales and a crowded film production industry, because the output of this segment—glamorous movies—is very visible, even though not highly profitable," Ariel says.

Ariel says it started buying Viacom in mid-July at $20.83.

Despite the stock’s increase, we believe the stock still has substantial upside opportunity. As of September 30, 2009, shares traded at $28.04, a 22% discount to our private market value of $35.76

Now Viacom is trading around $32. Do you think it still has room to rock and roll?

As I wrote as early as June, the March-to-October rally was driven largely by "junk stocks." Leading the way were smaller firms with more debt, less cash, low stock prices and falling sales. These stocks were rebounding from terrible 2008's and their rise reflected investors' relief that worst-case scenarios had not occurred.

But, now, market prognosticators are watching closely to see if the low-quality rally might be over. Or at least waning.

Three different views on this topic:

1. The rally may have further to run, Robert W. Baird strategist William Delwiche noted Nov. 5. But, he says, trends will moderate and not all stocks will participate. He writes of recent activity:

Small-caps have moved into a lagging position relative to large-caps, failing to match gains on the upside and leading the way lower on pullbacks.

Financial stocks look weaker to Delwiche, while energy, consumer staples and utilities are looking stronger.

2. Commentators at Bank of America Merrill Lynch, led by chief U.S. equity strategist David Bianco, focused on the concept of beta, a measure of volatility, in a Nov. 9 note:

We expect higher beta stocks in general to outperform lower beta stocks as the market grinds higher. We expect higher quality stocks to outperform lower quality stocks of equivalent beta.

But beta and quality aren't the same things, and disentangling the two concepts can be difficult, they warn.

3. If you think the market rally has run out of steam, it may be time to move into so-called defensive stocks, firms that will hold value even if the market sinks or moves sideways.

Barclays Capital portfolio strategist Barry Knapp believes it may be too early to make any drastic moves. But, he wrote Nov. 6, "we have reached a turning point in the Fed liquidity-driven, highly-correlated rally across all asset classes." He adds:

While it's probably too early in the cycle to be playing defense, the valuation opportunities present in the space compel us to take a small step in that direction.

He proposes buying more defensive stocks but still favoring more economically sensitive stocks overall. For example, he believes tech, industrials and energy "should continue to outperform."

No matter what happens, many high-quality stocks seem to be trading at prices that could be attractive to long-term investors.

In the meantime, much will depend on corporate profits in the last three months of 2009. After a long recession and financial crisis, two of the weakest sectors are consumer discretionary and financials. Both are predicted to report huge boosts in earnings early next year.

If they do so -- if retailers have a better-than-expected holiday season and banks repair their balance sheets significantly -- the low-quality rally just might continue.

What scared Whole Foods shareholders should concern all investors, especially those in consumer-focused stocks: The outlook for next year.

Like many other retailers, Whole Foods gets praised for navigating through the recession relatively well. Investors worried about Whole Foods' sales trends and debt load dumped shares in 2008, and shares fell to as low as $7. Since the beginning of 2009, however, Whole Foods' stock is up 187%.

Announced the evening of Nov. 4, last quarter's results didn't contradict the thesis that the food retailer's business has stabilized. In fact, fourth-quarter earnings of 23 cents per share beat Wall Street expectations by 2 cents.

Sales trends weren't bad. Chairman and chief executive John Mackey told analysts: "We believe our sales have stabilized and officially turned the corner."

After five quarters of declines, comparable store sales figures rose 1.6%. Total sales for the quarter rose 2.3% to $1.8 billion.

With results that good, why are investors bailing on the stock? One problem, which I noted back in August, is the high expectations built into Whole Foods' stock price. Because it is a growing firm, investors are willing to pay far more for Whole Foods than other grocery chains. Before earnings were released, on Oct. 30, J.P. Morgan (JPM) analyst Charles Grom noted that Whole Foods traded at 27.6 times his 2010 earnings prediction. Rival supermarket chain Kroger (KR), meanwhile, trades at a price-to-earnings ratio of 11.2. That "seems a bit excessive," he wrote.

But even if you believe Whole Foods deserves a premium stock valuation, you should be worried that 2010 sales and profits will disappoint. And that's the warning investors received from Mackey.

Mackey said he sees "no anticipated positive change in the economy over the short-term." Whole Foods, like many other retailers, has already slashed its expenses, and further cuts will be harder to find. "We will have difficult expense comparisons due to the cost savings realized in 2009," Mackey said.

Credit Suisse (CS) analyst Edward J. Kelly noted:

The company is making progress in addressing some of its issues (slowing growth, downsizing its stores, exiting bad leases in development, and cutting its bloated expense structure), [but] this catalyst seems to be more than price in [its stock.]

The recession forced Whole Foods -- and many other companies -- to become more efficient and make tough choices. However, investors already have reaped most of the benefit of these changes.

In 2010, investors will need robust consumer spending to drive results. And, with the job market weak, that might be too much to hope for.

Technical analysts see some indications that it could. For starters, the market is pushing strongly against its near-term resistance, which is around the 1060 to 1066 level. Yesterday, it hit those levels and fell back. But short term sentiment, as measured by the percentage of stocks trading at 10-day lows, is bearish, says technical analysts at institutional brokerage Concept Capital. That indicates an oversold condition and could point the way higher for stocks.

Still, there are signs that the market is poised to roll over. On Nov. 4, more stocks moved down than up, a bad sign after the S&P 500 spent so much of the day in the green. And despite the oversold conditions, the market hasn't been able to put together any positive momentum, Concept Capital says.

More worrisome is the 60-day average correlation of individual stocks to the S&P 500. Right now, that number is 62% -- it would have to trade above 70% to be problematic. But if it keeps rising, it could be a sign of long-term weakness to come. Says Concept Capital: "A prolonged rise in correlation could indicate that a more significant period of market weakness is starting to develop."

During the past two quarters, U.S. investors have become accustomed to companies beating earnings estimates. Sure, much of that has been done with cost cutting, but a beat is a beat. In Europe and Japan, however, third quarter corporate earnings have been coming in below expectations. That's impacted valuations across the board. The Japanese Nikkei 225 has a trailing p-e of 37.58, the Xetra DAX 100 has a p-e of 43.95 and England's FTSE 100 has a p-e of 21.15. The S&P 500, in contrast, has a p-e of just 21.15.

The difference, Weinberg says, stems from labor market differences. In the U.S., job cuts have been deep and painful, but they've also been quick. Costs have quickly been realigned and that's helped keep price-to-earnings ratios near "historical norms," Weinberg says. European and Japanese lack the flexibility to cut wages or lay workers off to match falling demand. That’s good for workers but bad for valuations. Says Weinberg: “This will be a bad season for [Japanese, Euroland and London] stocks.”

At a press conference in New York today, Schwab chief executive officer Walter W. Bettinger II described the move as “game-changing.” Previously, investing a fixed dollar amount at regular intervals into ETFs would have incurred steep trading costs: Investors who execute fewer than 120 trades per year pay a hefty $12.95 per trade.

The four ETFs that debut tomorrow are designed to track the following broad indexes: Dow Jones U.S. Broad Stock Market Index, Dow Jones U.S. Large-Cap Total Stock Market Index, Dow Jones U.S. Small-Cap Total Stock Market Index, and FTSE Developed ex-U.S. Index. Schwab also said it will launch four additional ETFs—tracking U.S. large-cap growth and value stocks, international small-cap stocks, and emerging markets stocks—later this year. The stated expense ratios for all but the emerging markets ETF are below those for comparable funds from the three biggest players in the ETF market: Vanguard, Barclays Global Investors, and SSGA.

Vanguard spokesperson John Woerth told BusinessWeek that Vanguard will continue to introduce new ETFs, including seven new bond funds over the coming new weeks, but “has no plans to offer commission-free ETFs.” Woerth did note that investors should evaluate the “all-in” costs of any product, which would include a fund's expense ratio, trading fees, and other expenses.

For more information about the new Scwab ETFs, click here.

The real story is in the cost cutting and the sales. This year companies have cut their way to the bottom line. While sales have dropped by a double digit number, which normally would devastate the bottom line, but aggressive cost cutting, prior layoffs and a lack of corporate spending has managed to limit the damage. The result is that margins have been improved. The concept is that eventual higher sales will produce much higher earnings; the reality is that we are paying 28 times current earnings for the belief in that concept. Q3 is giving a sign that support the concept. Sales for this quarter are coming in 3.65% ahead of estimates, with earnings ahead 7.60%, resulting in an above average margin of 8.17%. And while year over year sales are expected to decline 10%, that is significantly better than the 19.9% decline in Q2 or the 16.5% drop in Q1 – less worse is better has come to sales.

So the $1.5 trillion question is, $1.5 trillion is how much sales have declined over the past year, where will the sales come from? A smaller part will come from increased consumer and corporate spending, inspired by a more optimistic outlook and by the need to replace outdated items that can’t be put off any longer; a potential Accelerated Depreciation bill is on the table, but not the Floor yet would also help. The larger part however may come from M&A. In this case companies have plenty of cash and shares, and the market seems ready to get back into the grove for Monday Morning Merger Mania.

Expect to see Pimco introduce more stock, or quasi-stock, mutual funds. "We're currently interviewing stock-fund managers from various firms -- looking to start from square one with a new product and apply our philosophy to new areas," Gross says.

The firm won't say whether it plans to start offering funds for which managers buy stocks, a move that would mark a profound shift. "I would be nervous if Pimco hired managers" to pick stocks, says Morningstar analyst Lawrence Jones. "That would be departing from their long-standing traditions and approaches." El-Erian says the new stock funds would indeed differ from existing Pimco stock funds, which purchase options and futures contracts on stock indexes but stash the bulk of their assets in bonds.

Pimco Total Return, Pimco’s flagship fund, is the biggest mutual fund of all, with more than $186 billion in assets. So why would Pimco, arguably the most powerful of all fixed-income shops, branch out into stocks? And why should you care? I posed these and other questions to Russ Kinnel, director of research at Morningstar, the Chicago fundtracker. Here are his thoughts.

According to Morningstar's data, Pimco has just 5% of its assets in equities. Why do you think Pimco would expand into equities?
Pimco's parent company, Allianz, does have some equity expertise already. Its RCM unit offers some terrific stock funds. (Morningstar recommends the Allianz RCM Technnology fund.)

Pimco also has some stock-plus strategies, essentially letting a bond manager run a stock fund. The basic idea is that you buy futures in a stock index and combine them with a short-term bond strategy overlay. It may be they are picking up mortgages or short-term high quality bonds instead of Treasuries. If they beat Treasuries, the funds will beat the stock index. It’s their way of running equity funds without equity expertise.

An Allianz unit, incidentally, got in trouble with the market timing scandal a few years ago. Pimco was unhappy because their name was slapped on a mutual fund. So you can be sure that if Pimco does branch out into stock funds, it will be part of the Pimco operation as opposed to some branding campaign.

Another thing is that Pimco seems to be very aggressive about growing. Just look at how many new fund launches they are doing—it seems like they are coming out with a new fund every couple of weeks. They keep finding a new wrinkle on bonds or asset allocation. Some of these funds are cool, but it seems like there is an aggressive goal there.

Is this a good time to be launching stock funds?
Pimco has done a pretty good job of sticking to what they do well, so I see that as a positive for investors. Given the massive inflows they are having, they could be buyers of equity teams when others are forced to be sellers. We’ve seen some fund shops sold or cutting staff recently. And very few places are hiring. It’s a decent time to be hiring equity managers, or a doing a boutique lift out. The wrong time to do that is when the market is raging, and you have pay obscene prices for every analyst and manager.

One criticism I’ve seen of Pimco is that its fund are expensive.
We give Pimco good ratings as a fund family, but it’s true that Pimco funds are expensive. Now, they offer a reasonable value in institutional shares, as well as funds they subadvise for Harbor and other places.

But the retail share classes, such as Class A shares, are pricey. That’s partly the fault of Pimco and partly the fact that you have to pay up to have distribution in fund supermarkets and through brokerage channels. If you look at the Schwab or Fidelity supermarkets and pull up bond funds, the only good low price bond funds you’ll see are the proprietary funds from Fidelity and Schwab who don't have to shell out a lot for to get onto their own platforms. Pimco is not giving retail investors a lot (of deals), other than the funds they subadvise.

Pimco Total Return, which is a bond fund, is the top-selling fund so far this year. Do you think the firm can grab equity investors, too?
Pimco is taking in a lot of money this year, so it seems to make sense that the business plan would call for branching out into stock funds. Pimco has massive, massive amounts of inflows, but most of that money is going into the institutional share classes of Pimco Total Return. Some of the Pimco asset allocation funds run by Rob Arnott are doing well. Overall, it’s stunning how much money Pimco is taking in.

The move was no surprise. Pfizer sealed its fate when it launched its $66.9 billion acquisition of rival pharmaceutical firm Wyeth, a deal that was completed on Oct. 15. Buying Wyeth required borrowing $22.5 billion.

S&P credit analyst David Lugg said in a statement that Pfizer's new, lower "AA" rating reflects:

... the challenge to realize earnings and cash flow benefits in light of pending patent expirations in the midst of a currently difficult market as well as the significant additional borrowings needed to fund the [Wyeth] acquisition.

As S&P's managing direction Nicholas Riccio told me in March, the AAA credit rating is "almost extinct at this point in Corporate America."

General Electric (GE) lost its triple-A rating in March. Only four firms still have S&P's top credit rating: ExxonMobil (XOM), Johnson & Johnson (JNJ), Automatic Data Processing (ADP) and Microsoft (MSFT). In late 1994, 14 compaines had triple-A ratings.

It's easy to blame the disappearance of the top rating on economic hard times. But it also reflects shifting priorities for CEOs, corporate boards and investors. Pfizer execs knew the Wyeth deal would hurt its sterling credit reputation, but they completed the deal anyway -- obviously for strategic reasons they see as more important than the recommendation of the credit rating agencies.

(S&P, like BusinessWeek, is a unit of the McGraw-Hill Companies.)

Soon, the firm plans to file for an initial public offering of its fire arms manufacturer Freedom Group Inc., according to people familiar with the matter. Freedom Group, with an estimated $474 million in sales, is one of the largest manufacturers in the world of fire arms and ammunition for the hunting, shooting sports, law enforcement, and military markets. Its brands include Remington, Marlin, Bushmaster, Harrington & Richardson. Cerberus declined to comment.

The decision to take the company public comes on the heels of the wildly successful listing of Cerberus’ Talecris Biotherapeutics Holdings --a former Bayer maker of plasma-derived protein therapies that the firm bought in 2005. Cerberus raised $950 million when it took the biotech company public on Sept. 30, making it the fourth-largest public offering this year, according to Renaissance Capital.

Barron's urged its readers to "Tune Out Dow 10,000 Maniacs." The Wall Street Journal spent its time focusing on an impending Standard & Poor's 500-stock index milestone. Even BusinessWeek has asked if Dow 10,000 is just another number.

They're right to be skeptical. Too much is made of the psychological impact of round numbers, whether its Dow 10,000 or S&P 500 1100. Technical analysts rarely focus on the Dow -- with only 30 stocks, it's too narrow to be of much use. And when they do, they focus on trends (the Barron's article focuses on when long-term and short-term trends in the Dow clash) or levels of support and resistance.

But to dismiss Dow 10,000 outright is mistake, says Blaze Tankersley, senior managing director at BayCrest Partners, an independent brokerage. He notes that when the Dow has traded near 10,000, it's stayed there for months, sometimes years. Starting in 1999, the Dow spent nearly three years stuck in a range with 10,000 as its base, before crashing through in 2001. On the way back up, it traded around 10,000 for around two years before trading up to 14,000.

"Anyone who thinks this is irrelevant is likely a fool," says Tankersley. "[Dow 10,000] magnetizes prices towards it for many months if not years to come once [it's breached]."

Caputo, pictured here, says the financial pullback by women with kids is particularly worrisome because women—who control 80% of household finances—are a critical barometer for the U.S. economy. “How women are feeling is going to help lead our country out of a recession,” Caputo says.

Three-quarters of women with children say their spending and savings habits been permanently altered by the recession compared with 61% of women without children as well as 60% of all men who had the same response, according to the survey. And while we all know that memories are short, Caputo says the economic downturn should have a long-lasting impact on the psyche of American women. “My own perspective is that nothing is forever, but right here, right now, that’s how women are feeling,” she says.

Other noteworthy stats about women with kids from the survey:

• 63% say they have delayed the purchase of a big-ticket item such as a car. By comparison, just 50% of women without kids in the home and 52% of men have postponed major purchases.

• 52% of women with children have taken money out of savings or investments to help cover expenses. By contrast, 42% of women without children and 39% of men have dipped into those savings.

• 31% of women with kids are pursuing additional education. Just 16% of women without children and 21% of men are returning to school.

It’s also interesting to note that wealthy women with assets exceeding $250,000 are feeling the pinch, too. According to the survey, 66% of these women are cutting back on everyday expenses.

“Every working mom I know feels like they are working longer hours—or not working,” Caputo says. “There is a reset going on in the minds of women today.”

Have you permanently changed your spending and saving habits in response to the recession? Why or why not?

Hard assets. That's what more investors are talking about and putting money into these days. Look at the price of gold this week, surging to an all-time high above $1,060 an ounce on Oct. 8. That wouldn’t have turned heads a year ago, when the world was staring into the economic abyss with the credit markets frozen and all asset prices in freefall. But now, with the stock market up 58% since March and growing confidence that an economic recovery is taking shape, what's the allure?

True, nobody expects the dollar's slide against the euro, yen and several other currencies to stop anytime soon. And people are justifiably nervous about what the ballooning U.S. Treasury's balance sheet will mean for future prosperity. But isn't speculation about the dollar losing its pre-eminence as the world's serve currency a bit premature?

Not to Jim Rogers, celebrated former hedge fund manager, world traveler and investment guru. He recommends gold and commodities that serve as a store of value since not many central banks insist on maintaining sound currencies and even those that do – Canada, Singapore and Australia – will be under pressure to follow the trend if they want to stay competitive. He noted the worry that the world's central banks, having loaded up on so much debt to get their economies moving again, are likely to be tempted to inflate their currencies to drive down the costs of paying down that debt.

Rogers spoke to a packed auditorium of investors in midtown Manhattan on Oct. 8. The event was sponsored by London-based ETF Securities, which just launched its first physically backed gold and silver ETFs in the U.S. – ETFS Physical Swiss Gold Shares (SGOL) and ETFS Physical Silver Shares (SIVR). The company has provided commodity ETFs in Europe for most of the past decade.

Physically backed is meant to become a buzz word, to distinguish these vehicles from exchange traded funds that invest in commodities futures. The future of those funds is looking more and more iffy with the Commodities Futures Trading Commission imposing position limits on funds and looking at other ways to rein in speculation that can drive prices up.

Great question.

So let's dig a bit deeper: I included in my post a link to the EBRI/ICI report. You'll see that this research covers people who consistently held a 401(k) from 2003 to 2008 (Page 8 in the report).

And while the AVERAGE balance for those folks exceeded $80,000, their MEDIAN 401(k) account balance was $43,700 at yearend 2008.

But here is the number might make the most sense to readers: The median account balance for ALL 401(k) participants (based on a sample of six million plan participants in the database of 24 million) was a mere $12,655.

Do you think $12,655 is a more realistic account balance for the typical worker?

Why or why not?