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Crossing Wall Street >>> Weekly Market Review >>> Earnings? Stalling Out!

edited February 2015 in Fund Discussions
"The surging U.S. dollar and collapsing oil prices have dramatically changed the outlook for corporate earnings growth. Guidance from companies hasn’t been this poor since the depths of the Financial Crisis. At the end of the Q3, Wall Street had been expecting Q4 earnings of $32.24 (that’s the index-adjusted number). Now it looks like it will be about $27.64. That’s a big cut. At the end of Q3, the Street was expecting full-year earnings for 2015 of $136.07. That’s now down to $119.76. That’s a 12% cut in four months. Stock prices haven’t responded nearly as much."

Read all about this, and more, through the below link ...

http://www.crossingwallstreet.com/archives/2015/02/cws-market-review-february-6-2015.html

Comments

  • @Old_Skeet: Thanks, I like Eddy's stuff !
    Regards,
    Ted
  • Thanks @Old_Skeet. Mr. Effenbein is always a good read.
  • And keep on reading:
    "For the next few quarters, I think overall corporate profit growth will be low but positive. Think 2% to 5%. Of course, some companies will manage themselves better than others during a flat environment. In fact, we’re starting to notice that with the results of our Buy List stocks." CWS

    stick with the "some companies" He does...
  • edited February 2015
    Hi Tampabay, Ted, JohnChisum and others,

    If you are of the camp that domestic equities are cheap you might wish to visit the links that I have provided below.

    The first one is Morningstar’s Market Valuation Graph. It is showing that stocks in general are currently, as of Friday’s market close, four percent overvalued.

    http://www.morningstar.com/market-valuation/market-fair-value-graph.aspx

    The second one appears in the WSJ and is titled P/E’s & Yields on the Major Indexes. It reflects that the S&P 500 Index is selling on a TTM of 20 where as a year ago it was selling at 17. So from a TTM P/E Ratio S&P 500 stocks have gotten more expensive over the past year by better than fifteen percent.

    http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=wsj_mdc_additional_ustocks

    And, another link that might be of interest is by Doug Short. It is titled … Is the Stock Market Cheap? Mr. Short's findings are that it is expensive with TTM earnings stalling out since September of 2014.

    http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php

    I believe that I will stay with my thoughts to reconfigure my asset allocation by reducing domestic equities by about ten percent and raising my other asset area within my portfolio by a like amount. When done my asset allocation will bubble somewhere around 20% cash, 20% income, 20% domestic equity, 20% foreign equity and 20% other assets. To me, domestic stocks are expensive and bonds are not a bargin either.

    Have a grand weekend … and, most of all … I wish all … “Good Investing.”

    Old_Skeet
  • edited February 2015
    Re: "I believe that I will stay with my thoughts to reconfigure my asset allocation by reducing domestic equities by about ten percent and raising my other asset area within my portfolio by a like amount. When done my asset allocation will bubble somewhere around 20% cash, 20% income, 20% domestic equity, 20% foreign equity and 20% other assets. To me, domestic stocks are expensive and bonds are not a bargin either."

    Thanks Ol Skeet and the others. All good thoughts. Your comments serve as a timely reminder to perform an XRay at M* if, like me, you haven't done so lately.

    Hoping for a little more strength in the energy & commodities sectors next week. Currently up to my neck in it. Would prefer only about waist-deep now that it has rebounded,

    Good weekend to all ... hank



  • Hi hank,

    I too am overweight in energy and materials. Interestingly, they have been the better performers over the past week along with financials.

    http://www.sectorspdr.com/sectorspdr/tools/sector-tracker

    Old_Skeet
  • Do what you want, I'm always ok with that,
    BUT,But the #1 investments in the WORLD is profitable US corporations...but spread your money everwhere if you feel like that is "protection"
    Weekend?? Everyday is Saturday in Tampabay World, Sunday gotta rest,drink bud and watch sports
  • edited February 2015
    Hi Tampabay,

    Thanks for the reply. I am not sure if you looked at Doug Short's link. If so ... Did you notice that December 2014 TTM earnings for the S&P 500 Index were reported at $104.50 while January's 2015 TTM earnings came in at $104.01? Seems forward earning estimates keep getting revised downward while TTM earnings are now starting to stall out since September of 2014 where they peaked at $105.96. This is not good. It will be interesting to see if investors keep paying more and more for earnings. I am of the camp most want. Does this mean a crash? Prehaps not; but, I do think the upside is now more limited and perhaps we have, or about to, top out. There are indeed headwinds blowing centering around a strong US$ and it is showing up in corporate earnings.

    Just in case you missed reading this report I have linked it below again ...
    http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php

    I know you stated sometime ago and something to the effect that your assets had to work because you don't. Let's hope they keep on keeping on. I am thinking that your wife's portfolio being more conseratively invested with steady earners will out perform your portfolio of high flyers this year.

    And, yes I still plan to reduce my holdings, over time, to domestic equities and raise my allocation to other assets by a like amount within my portfolio as I feel it is the prudent thing to do under current light. Hey, if the wind is blowing and clouds are moving in and you hear thunder in the background ... take shelter ... most likely a storm is coming. Let us hope it is a blow by and stays off shore or better yet let's change course and fly around it.

    Old_Skeet
  • I am always skeptical of "Average" figure reporting....Yes it is Always important to check if your investments are increasing their earnings, while other Companies may be losing money or in times of decreased earnings, thus their Investment Value follows
    there is and "upside" to every mountain, but profits are predictable to some companies
    But to worry about "averages" always bring me to think the "average" earnings in the U.S. is something like $35,000...having nothing to do with you/me
    Nothing wrong with "conservative" investing, Balanced fund are a ROCK to any portfolio, my wife finds a winner, you can't get her to switch.....(but I have added others for her)
    that's how she got me.....Ha
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