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Earnings being down doesn't translate into a bear market or even a recession. Currently, it would take the Fed to aggressively raise rates to engineer a recession. For the foreseeable future that isn't happening.
not what i said . i said stocks are running out of steam and based on their almost 7 year cycles time too .
the fact we have decreased earnings coupled with increased dividends with quite a few exceeding earnings are not good signs for strong gains from equity's . basically the stocks are saying there is little we can do to grow your money so take some back , when this happens .
what i said is many managers are very cautious at this point and will rather hide out in bonds until the eventual dip happens .
nothing much has changed in the world and things are still structurally unsound .
for long term investors like many of us we ride it down and ride it up . but many pro's who have no such restrictions on them to be fully invested are not committing much money to propel things
In one of your posts you talked about a 20-50% decline..thats a severe bear market.....
Markets move on expectations and my point is that with 70% of companies beating estimates that's a big positive and stocks responded in kind....actually if you look really closely at the earnings if you take out oil companies the earnings did much better overall...again, yes they are down, but not to warrant a severe decline in the market.....and "many managers being cautious " is a very good sign for stocks from a contrarian point of view....
check your past . just about every 7-8 years we have seen those declines for quite a while now .
there is not a direct link to earnings and stock prices as they happen , it is the future perception that counts not the here and now . when you give away more than you earn that does not sit well for the near future .
did you know the higher the current earnings the smaller the market gains ?
gains and corporate profits dont flow together more often than not.
in the book a random walk down wall street 548 nyse issues were tracked and analyzed over 5 year periods and the results were the performance had no relationship between the technical and fundamental signals and the actual stock performance ..
ned davis research took another look at the relationship and going as far back as 1927 they found the biggest gains are coming out of bear markets , not falling from a bull market .
when profits rose more than
20% the s&p returned a mere 1.3% in gains
10 to 20% saw 5.8% in gains
(-10% to + 10% in profits saw a 9.3% jump in gains
(-10%) to (-25%) drop in profits saw 28.6% gains
(-25%) and lower saw a -28% drop in share price.
as you see the biggest gains come out of the bleakest of times just when you least expected .
the problem now is no steam and little capital spending to improve productivity and increase business and market share in the NEAR future . the downside is far greater than the upside at this point .
potentially we are due for a 20-50% decline and indications are if we are lucky stocks will squeak out mid to high single digit returns in the near term .
Last edited by mathjak107; 09-19-2016 at 12:13 PM..
you keep barking out 20-50% market decline talk..thats a monumental bear market...I feel the economy is fine, valuations are fair and sentiment is still very very cautious which I love to see....Lets just agree to disagree.....in the meantime you enjoy your retirement and I will stay fully invested.....
the economy is okay , it isn't fine but regardless something that is not even on the radar ALWAYS is what kicks off the next downturn . it always plays out like that . and down we go . for how long , no one kmows .
i am invested too and i have no intention of timing things . but it isn't about us . it is about the professional money that drives us higher and lower and that money sees higher risk than reward and little reason to be invested much today .
Fifty percent declines are pretty rare... there have been only three of that magnitude in the U.S. over the past 75 years.
Smaller declines happen pretty frequently. Since 2009 we've had six corrections of approximately 10%-20% in magnitude. They don't come on any particular time table, IMO.
You lost me on that one. Yes, we did have two bears with the onsets separated by eight years. One that started in 2000 and one that started in 2008. Prior to that there was nothing major or lasting until we go back to 1987.
Sure, there were 1990 and 1998, but at least from a market perspective they were no worse than 2011, all were roughly 20% decline. 1990 was arguably scarier... kind of a warm up for the 2008 financial crisis, but the market loss was modest and it recovered quickly and never looked back. Even so, there was no magic 7-year or 8-year spacing.
which all pretty much means with little steam left 8 years in to the bull market , falling corporate profits and potentially rising rates there is a pretty good chance we are more likely due than not .
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