I heard one interesting theory, that could be more true than expected: the market is not doing so good in United States, because in general, corporate earnings there does not feel that good as well. For now, including Q1 & Q2 of 2015, the corporate earnings of the S&P 500 companies are -3%, and analysts expect that with the Q3 inclusion and release, it would be rather more a -3.3% trend. The "consequence" of the problem are said that markets does not take much risks has well and basically pull the trigger of "sell" more quickly. While I don't have a strong opinion neither against or for this theory, I would want your opinions about it, if it could be (more?) related to this fact, or if it does not matter much.
The thing to remember is that corporate earnings are down in general due to unfavourable currencies. So US companies reporting their results in USD but getting a lot of their sales in other currencies, the strong USD makes the dollar amounts on the top and bottom lines lower than previously. Disregarding currency fluctuations, most of the companies I follow have increased their EPS.
That's right, but then, what matters most is how much they value in their home currency. The currencies discrepancies mainly depend of the health of the economy with the currency, and its policy politically and economically. So it means basically that the markets where they are, with other currencies, is doing less benefits to them, than expected. Don't get me wrong, I think US companies are doing rather good. Not something much extra, but good. But what matters is the money they can get out of the current fiscal year or the next one, because this is what estimates how and what investments they can do in $US, and the home R&D, for example, is probably done under this currency.
I think the fact that interest rates are so low will keep the market in an upward trend (and will be more important than profits). The money has to go somewhere and right now, the stock is one of the only places you can get a worthwhile return.
I believe you're going to see more and more institutional big boys taking more short positions, going to more cash, and putting more $ into "alternative" investments if rates continue to be held down much longer. It appears that the market has perhaps about had its fill of free money. http://www.marketwatch.com/story/ic...o-rates-junk-bonds-2015-09-29?dist=lcountdown
It is a fake argument when you start out by making it sound like something is a fact that is not a fact. The market had a rough August. The big problem this August was the China crashed and a month later, the market still has not recovered from those few days. Other than those few days, the market has been neutral this year, but that is after 7 years of solid gains. You take away the issue with China and the issue with Greece, and we would be doing ok... not great.. but ok this year. People need to have some perspective. The market has doubled in the past 5 years or so, there needs to be a breather where PEs get back in line while earnings catch up to stock prices. It is definitely not as easy as it has been the past 7 years to pick winners, but you still have an overall even market, so just some research should get you above 50% when picking winners.
