It’s risk on. That’s the market’s sentiment. Question is whether that risk is worth it? There are only a handful of stocks carrying the market higher – a sure sign of both fragility and bearishness. Are there are only “10” stocks that can grow? We have not seen a market this narrow since the dot.com bust. Now should names like Amazon, Google, Apple, Microsoft, Meta and Tesla pull back from nose-bleed valuations – the whole house comes down with it.
Equities Often Slow to Connect the Dots
Last week I warned the market was poised for a sharp pullback. This week we got it. In short, both fundamentally and technically the market felt vulnerable. Market multiples pushed 19x forward on little substance. And from there, it did not take much for the bulls to lose their nerve…
Remain Wary of Permabears
Jeremy Grantham is a well known permabear. This week – he called for a possible 50% correction. Sure… it’s probable we see something in the realm of 20%… but 50%? I decided to look at Grantham’s track record against the S&P 500 over 25 years. Guess what – he has woefully underperformed the market. Hardly surprising. Beware of doomsday ‘crash callers’ like Grantham… and he is not alone. They are dangerous.
It’s Earnings Season – Will They Meet Expectations?
Earnings seasons starts this week (Friday) with the banks. Across all sectors – analysts expect earnings to expand by 4% in 2023 – or around $230 per share for the S&P 500. If we don’t experience a recession – this feels probable. However, that’s the question – are we likely to experience a contraction? If so, it’s most unlikely we will see expansion – which implies the S&P 500 feels expensive around 4100.
For a full list of posts from 2017…