Lets consider as a forum, this topic, we all are here to win, lets share our sentiments with each other Interestingly during the roaring 20's of the past century, the world saw an economic high, in which underlying economic indicators were mainly ignored. People do not complain when they are making money, the wise investor or trader knows that when people are ambitious be careful. What happened to peoples fear of the domino effect of other debt riddled states? The prime minister of russia warns of a "deep recession" in 2015. Japan is deep in recession as well. Also according to bloomberg news, the Jerome Levy forecasting center sees a 65% chance of a recession in 2015. Quote David Levy the current chairman of the Jerome Levy forecasting center: "Clearly the direction of most of the recent global economic news suggest movement toward a 2015 downturn" end quote. Why is this forecasting center any different than the others that may say the complete opposite? Such as Morgan Stanley who predicts a longer run for the market. They most definitely have weight in words since their founder called the 1929 Great Stock Market Crash. He wisely sold his stocks when he saw indicators that pointed to an unsound market.
A recession is when the GDP of a country declines for 2 consequtive quarters. There is no way this will happen in the USA. In Russia and Japan, it's possible (or even probable) and I don't see Europe doing much better either. I'm neutral when going into the 1st quarter of 2015. A lot of signs point to the US markets heading higher and higher, but I feel that the current P/E levels are already quite high and they will calm down investors and cause volatility. (fast and strong dips which will present good buying opportunities for short term traders)
I sure hope you are right in that America will not see another recession this year. I could not take it. We are just starting to earn money again and the blow would hurt us for sure. I also could not see Europe going through a financial crisis as they seem to do just about as well as America, if not better because they are a more frugal society.
No way will we see a recession for at least 6 months, I think this bull market has legs for while yet. I think many brick-n-morter type companies are going to beat estimates because of the price of oil, which lowers costs for just about everyone. Nobody was expecting this big of a drop in oil prices when they were making 4q14 estimates. I really don´t think we will have a recession at all in the USA. Other countries are going to have a bigger downturn, but by the time that starts to affect us, they will already be turning around. We have a lot of thing going for us that many countries in Europe and Japan do not have, which will allow us to float above them during their downturn. I do think some individual stocks are trading at too high of a PE, but there are still bargains to be had, expecially if you are looking for companies that benefit greatly from low oil prices.
I certainly think that there's scope for a breather. In fact, I think it would be healthy. Whether it's a full-blown downturn in the market it's hard to tell. It's becoming a stock picker's market again, as it's hard to justify valuations, particularly if you adjust for the abnormal interest rate environment. We'll see what happens when it becomes more clear cut on the timing of the Fed's rate rises. But given that Europe and Japan aren't in rude health, we can probably expect some volatility across equity markets. We're in a very interconnected world and US companies, particularly its banks, can't escape uncertainty elsewhere.
The price of oil is a good topic. When the price started to go down, so did a lot of indexes and all the reporters were painting dooms day scenarios again. I just see it as a positive thing for the general economy: energy companies will suffer but others will have lowered expenses and consumers will have more money to spend since they spend less on transportation. I do agree about a breather. As I said earlier, the P/E levels are starting to be really high. Yes there are some bargains to be had, but more often that not those come at a risk.
PE values are going to drop quickly when new earnings are released. When some of these companies beat earnings, and then their year ahead projections are raised, their PE will drop significantly without their price dropping. When you have such a big increase in price, that trailing earnings number artificially increases the PE.
Nah. It will have an effect, but how much are you really expecting the profits to grow in one quarter? Even if, on average, the S&P500 companies would manage to raise their Q1 profits by 5% it won't change much. Keep in mind that it's just 1 quarter out of 4. Say a company currently has an EPS of $2.00, an even $0.50 per quarter.They raise their profits by 5% on Q1 (making it $0.525) their 12 month trailing EPS will jump to $2.025. That is an increase of 1.25% In other words, assuming that there is no change in price, the current PE of 19.37 would turn into 19.13. If you count that they will be able to keep the 5% growth in EPS going on for the whole year, then you start seeing an effect. But then again, it's rare for the price to stay the same if a company is constantly increasing it's profit over a longer period of time.
No one knows for certain. What we do know , however based on technical analysis, is that the market will always correct at some point in time. What goes up must must come down.
it isn´t just the 1 quarter, it is the revisements upwards for the next 2 quarters. It has been a long time since oil has dipped this much, I think analysts are not sure how much it will trickle into the profits of different companies. In many cases, there have not been any revisements even for companies that have obvious benefits from low oil.
