In 2011, S&P 500 profits expanded 15%. And yet, the benchmark’s price finished in the very same place that it started the year. In essence, since prices flat-lined and earnings experienced double-digit growth, a fundamentally inexpensive stock market via the price-to-earnings ratio (P/E) became even cheaper.
The most common reason cited for P/E contraction in 2011? The Euro Zone debt crisis.
Obviously, sovereign [...] Continue Reading...
On the first day of December, 2011, a number of brand name corporations hit new 52-week highs. Here are a few that caught my eye: McDonalds (MCD), Phillip Morris (PM), Diageo (DEO), Kraft (KFT) and Treehouse Foods (THS).
Keep in mind, most of the media attention centers on the discretionary spending of the consumer (e.g., “Black Friday” widescreens, ”Cyber Monday” acquisitions of [...] Continue Reading...
The number “88″ means a lot of different things to different people around the world. For some, it expresses the notion that the universe is both infinitely large and infinitely small. Others see it as a message of eternal love. Meanwhile, Chinese culture recognizes “8″ as its luckiest number, with “88″ symbolizing even greater fortunes.
However, 8/8 is a rather dismal date for the [...] Continue Reading...
One of the “constant” declarations of the current earnings season? Of those reporting, roughly 3/4 of corporations exceeded profit-per-share estimates.
On the other hand, it’s not uncommon for 2/3 to 3/4 of companies to beat lowered expectations; key executives help to create “beatable” numbers. In addition, each of 8 major economic sectors typically have corporations that, historically speaking, raise the earnings-per-share [...] Continue Reading...
Scores of investment gurus live on momentum and relative strength. They may advocate investing solely in those assets that have put together streaks over 4, 8 and 12 weeks (3 months).
Other media darlings don’t care what happens in a shorter period. They may run with a particular theme for decades. For instance, Jim Rogers likes commodities and the China [...] Continue Reading...
At the start of the week, analysts were wondering whether or not stocks could “hold the line.” Specifically, the bulls were simply hoping that the current price on the S&P 500 would stay above its 200-day moving average.
However, the S&P 500 had little trouble holding the 1263 level. In fact, by Thursday, June 30, the U.S. stock [...] Continue Reading...
Until recently, scores of gurus had questioned the sector rotation into non-cyclical sectors. April jobs numbers were “phenomenal” and corporate earnings were sensational. Why should investors sell in May and go away?
Yet telecom, health care and consumer staples (e.g., toothpaste, peanut butter, etc.) were rocketing up the relative strength percentile rankings. And many analysts explained that the April-May [...] Continue Reading...
Stocks haven’t quite “gone away” in May. In fact, the S&P 500 at 1346 remains within spitting distance of its multi-year peak of 1370.
In spite of remarkable stock resilience, the 10-year treasury bond yield has dropped to a jaw-droppingly low 3.14%. That has helped Bond ETFs hit 52-week highs for the fourth consecutive week. (Remember, it wasn’t that [...] Continue Reading...
It wasn’t that long ago when I criticized terms such as “overbought” and “undervalued.” (See April’s Going Global: Rethinking the Overbought Concept.) In essence, I explained why investors may give more credence to powerful-sounding words than they give to common sense information.
With that said, you should look at a sector’s P/E ratio and compare it against the sector’s P/E [...] Continue Reading...
Two of the most bullish voices in the mainstream media include money manager Ken Fisher and Bob Doll, the chief equity strategist at Blackrock. Fisher experienced an epic “fail” by completely missing the 2007-2009 bear/financial collapse; he had little choice but to stick with a never-ending bullish theme to claim credit for calling the “turnaround.”
Bob Doll has always [...] Continue Reading...
