FYI: One of the things that’s kept people out of stocks (or more lightly allocated) has been the concern over “negative earnings growth” or the idea that the EPS and sales growth of 2018 was petering out.
When you hear stuff like this, it’s important to remember that we had a one-time tax cut benefit in all of the numbers that allowed S&P 500 constituents to report lower effective tax rates and an “instant” profitability spurt – and that this sort of thing was never going to be repeated in 2019. The corporate tax cut was made official in December 2017, and the S&P 500 had already spent the entire year anticipating it with a huge run-up in share prices. Then, in 2018, it took effect, and we had two double-digit selloffs into the news (one in February and then another that stretched from September through Christmas Eve – this one falling all the way down 20% to produce the requisite “bear market” headlines).
Regards,
Ted
https://thereformedbroker.com/2019/07/30/deceleration/
