Say,
Good for you. "Someones" hold 500,000,000 shares at a current price of $555 a share. Their investment experience may be different than yours.
Igy
Say,
Good for you. "Someones" hold 500,000,000 shares at a current price of $555 a share. Their investment experience may be different than yours.
Igy
Damn straight. I'm no shuckster.
Say,
It is more important you are not a sucker.
Poto^
Ghost of Igloi wrote:
Say,
There you go (see the agip post above), and there are others. Valuation as a market predictor is subject to investor risk preferences. At some point investors learn that stock prices are inversely correlated to expected return.
Igy
Igy, if valuation is such a good predictor of the future, should we not short every stock with a PE over 30 and buy every stock with a PE under 12?
Would you be comfortable with that as your strategy?
I would not be comfortable with that - I think history shows that valuation is just one of several ways to estimate the future returns of the stock market.
agip,
This is the real Igy, which you can tell because I actually can discuss the issue which the Faker cannot. No, I am not tied that close to the PE, however market history has punished PEs above the norm. Years ago I read a study of poor market returns for stocks with PEs above 100. I would tend to avoid value traps in energy and commodities where PEs are closer to the 10. CNBC was touting the non-GAAPnearnings of Cytrix Systems after market, if you did an analysis of the GAAP earnings it was notbso good. Similarly Service Now reported non-GAAP earnings of +0.05 but GAAP earnings of -0.40. Fortunately investors are questioning the rising losses in NOW.
I agree generally with your points with one major exception, I think earning have peaked and we are nearer to a market top than you believe. You and coach d believe earnings will improve or multiples will expand. I disagree and think we are on the otherside. That is what makes a market.
Igy
What makes you think earnings have peaked?
Foible,
It is a fact at this point. S&P 500 LTM (Last Twelve Months) earnings peaked September 2014 quarter.
Igy
Ghost of Igloi wrote:
Foible,
It is a fact at this point. S&P 500 LTM (Last Twelve Months) earnings peaked September 2014 quarter.
Igy
but that's just because of the collapsed in energy prices and commodity prices. It isn't from a decline in economic strength. We know this because broad measurements of corporte profit continue to rise.
A drop in profit from a few energy and materials firms because of the fall in the price of oil isn't very scary to me.
agip,
What about AXP, MMM, CMG, MU, and WMT, these companies in diverse sectors, have little to do with energy or materials? You can't just isolate energy and then say everything else is ok. What happened to all the benefits companies and individuals would get from lower energy prices?
Igy
But earnings could still go higher, no? What makes you think they won't?
Ghost of Igloi wrote:
agip,
What about AXP, MMM, CMG, MU, and WMT, these companies in diverse sectors, have little to do with energy or materials? You can't just isolate energy and then say everything else is ok. What happened to all the benefits companies and individuals would get from lower energy prices?
Igy
do you want me to cite the hundreds of companies with growing sales and earnings?
I could if you want. But naming a few stocks to prove a large point is not all that useful, methinks.
as for the benefits of lower energy - I haven't seen much on that - not sure if it is happening or not.
Foible,
You have currently record low interest rates, low energy prices, near record stock buy backs, all of which are tailwinds for the business bottom line and earnings are declining. Of course it can change. We can all hope.
Igy
agip,
Perhaps you, but certainly Wall Street is cheering McDonalds earnings. The fact is McDonalds revenue was $6.99 billion in Q3 2014 and $6.62 billion in Q3 2015. How much of the "beat" was the $2 billion MCD spent on stock buybacks. If you think this is quality, and hundreds of companies are doing the same, OK, you win.
Igy
It's not just McDonalds.
Ghost of Igloi wrote:
Foible,
You have currently record low interest rates, low energy prices, near record stock buy backs, all of which are tailwinds for the business bottom line and earnings are declining. Of course it can change. We can all hope.
Igy
corporate earnigns are NOT declining unless you look at one arbitrary and discrete group of companies, like the SP500. Nationwide, 2Q2015 corporate earnings grew.
http://www.bea.gov/newsreleases/national/gdp/2015/gdp2q15_3rd.htm"Profits of domestic financial corporations increased $34.3 billion in the second quarter, in
contrast to a decrease of $3.1 billion in the first. Profits of domestic nonfinancial corporations increased
$17.0 billion, compared with an increase of $117.3 billion. The second-quarter increase in profits of
nonfinancial corporations primarily reflected an increase in “other†nonfinancial industries that was
partly offset by a decrease in retail trade industries. A small increase in manufacturing industries
reflected an increase in durable goods that was mostly offset by a decrease in nondurable goods."
Ghost of Igloi wrote:
agip,
Perhaps you, but certainly Wall Street is cheering McDonalds earnings. The fact is McDonalds revenue was $6.99 billion in Q3 2014 and $6.62 billion in Q3 2015. How much of the "beat" was the $2 billion MCD spent on stock buybacks. If you think this is quality, and hundreds of companies are doing the same, OK, you win.
Igy
I'm not going to play the stock by stock game with ya, Igy - that would be useless. We could trade companies from now until Rio and it wouldn't prove a thing. You really think I couldn't spend 90 seconds googling and find a list of big companies with growing sales and earnings?
agip,
Just announced Leading Economic Indicators down .2%. Everything is awesome!
Igy
Ghost of Igloi wrote:
agip,
Just announced Leading Economic Indicators down .2%. Everything is awesome!
Igy
indeed it is, indeed it is.
more immediately:
New highs in the recovery off the lows today -
57 days since the lows
SPX up 9.2% from bottom
SPX down 4.5% from highs
Sally V,
Good to see you back. Well yes it is not just McDonalds, Service Now reported adjusted earnings (non-GAAP) of +0.04 cents a share. However, the CEO and CFO put their signature to GAAP earnings which were a loss of 0.28 cents a share. When you exam their earnings, announced yesterday, the actual 2015 Q3 loss was $60 million in comparison to 2014 Q3 loss of $49 million. What was the difference between the non-GAAP and GAAP earning? Stock compensation. How can stock compensation not be a business expense? The stock is up 6.5% today on the belief that a free ride continues and actual earnings does not matter. The reality is that the stock is currently trading at $77 a share and is losing $1.34 a share.
If one believes that MCD and NOW are a market aberration like apparently agip does, well what can I say. Oh yes, that is what Wall Street wants you to believe. The facts are different if one is willing to actually read an earnings report.
Igy
And the greater fool theory is alive and well...for the moment....