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Earnings are one of three data feeds in Old_Skeet's market barometer. If I were to use only forward earnings estimates as my guide to set my equity allocation I'd currently be heavier in equities. I currently use three data feeds to gague the S&P 500 Index ... an earnings feed comprised of both reported and forward earnings estimates, a breath feed and a technical score feed which consists of a combination of RSI and MFI. With the combined feeds incorporated into the barometer which in turn feeds my equity weighting matrix I get meaningful information which assist me in setting my equity allocation within my portfolio. In addition there is Old_Skeet's SWAG (Scientific Wild Ass Guess) as a back up that takes other things into account such as seasonal trends, my personal market outlook along with news driven events which I have used a good number of times in the past as buying opportunities for special investment positions.
Folks ... if you don't wish to actively engage the markets as I do with part of your portfolio then there are asset allocation funds that will do this for you. As I have aged, I am turnning more over to the more active professional asset allocators and throtteling back my own activity. This is the reason I narrowed the band width of my equity allocation form a 40% to 60% range to a 45% to 55% band width a few years ago. In the next few years as I enter the 70's, age wise, I'm thinking of going to an equity band width range of 40% to 50% equity. This will still allow me to be active within my own portfolio but put me in competition with my conserative asset allocation funds held within my hybrid income sleeve which now consist of nine funds with plans to expand to twelve. In doing this, I'll be reducing the number of my all equity funds held from the current number of twenty to sixteen trimming in the growth area of the portfolio by four funds (13 to 9).
Back to earnings ... Forward estimates are just that "estimates." And, often they get revised downward more so than revised upward. Come to think of it I can't remember of to many upward revisions. Once announced they become as reported (TTM) earnings. For March 2017 ending S&P reported earnings (TTM) for the S&P 500 Index at $99.70. Seems, this is a big spread from where they currently are to what the article suggest they might be going forward.
Below is a link to a S&P as reported earnings recap.
The question ... How much faith do you wish to place in forward estimates?
From my perspective stocks are extended based upon reported earnings. Thus, I am in the process of rebalancing my portfolio towards its low range for equities. I am, at this time, not willing to bet the forward earnings "come line" although I am expecting earnings to improve I'm thinking forward looking estimates stated in the article are currently more of a dream than a reality.
Comments
Folks ... if you don't wish to actively engage the markets as I do with part of your portfolio then there are asset allocation funds that will do this for you. As I have aged, I am turnning more over to the more active professional asset allocators and throtteling back my own activity. This is the reason I narrowed the band width of my equity allocation form a 40% to 60% range to a 45% to 55% band width a few years ago. In the next few years as I enter the 70's, age wise, I'm thinking of going to an equity band width range of 40% to 50% equity. This will still allow me to be active within my own portfolio but put me in competition with my conserative asset allocation funds held within my hybrid income sleeve which now consist of nine funds with plans to expand to twelve. In doing this, I'll be reducing the number of my all equity funds held from the current number of twenty to sixteen trimming in the growth area of the portfolio by four funds (13 to 9).
Back to earnings ... Forward estimates are just that "estimates." And, often they get revised downward more so than revised upward. Come to think of it I can't remember of to many upward revisions. Once announced they become as reported (TTM) earnings. For March 2017 ending S&P reported earnings (TTM) for the S&P 500 Index at $99.70. Seems, this is a big spread from where they currently are to what the article suggest they might be going forward.
Below is a link to a S&P as reported earnings recap.
https://www.advisorperspectives.com/dshort/updates/2017/04/04/is-the-stock-market-cheap
The question ... How much faith do you wish to place in forward estimates?
From my perspective stocks are extended based upon reported earnings. Thus, I am in the process of rebalancing my portfolio towards its low range for equities. I am, at this time, not willing to bet the forward earnings "come line" although I am expecting earnings to improve I'm thinking forward looking estimates stated in the article are currently more of a dream than a reality.
And ... so it goes.