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AP: Corporate profits appear to be growing at a much slower pace. How does that play into your outlook? Paulsen: Corporate profits are 15 percent plus higher today than in 2006. Sure, earnings are growing slower but so what? The key is the valuation, what people are willing to pay for those earnings. And valuations are starting to rise because people are getting more confident. We've already produced the great bulk of earnings that we're going to get in the cycle. But we can still break through (the Standard & Poor's 500 record of) 1,565, and touch 1,700 with very modest earnings growth. I think we're going to have 15 to 20 percent total returns in 2013, with dividends, in that ballpark. Kleintop: I think earnings expectations have to come down a lot, especially for the second half of the year. The current expectation is for 10 percent earnings growth in the third quarter and 13 percent in the fourth. I think they're a bit too high. Maybe we'll see about half of that. It's hard to get (people to pay more for every dollar of earnings) if earnings estimates keep getting cut. The trailing 12-month price-to-earnings ratio is 14.8 right now. I'm not a bear, but it's hard to see how it can break above that level if earnings estimates are coming down.
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