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...
Popular emerging markets in the BRIC configuration – Brazil, Russia, India, China – suffered through severe bear markets in 2011. Yet far too many writers attribute the 20%-33% declines to Europe’s sovereign debt crisis alone.
It is true that the debt mess sent the U.S. dollar higher at the expense of the ruble, “real,” and the rupee. Contagion containment has also damaged the prospects for emerging market [...] 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...
Is it possible that commentators have underestimated Warren Buffett’s flexibility? Indeed, the Oracle of Omaha is best known for buying the cheapest names on “boring” brand name institutions, like Coca-Cola (KO), American Express (AXP) and Procter & Gamble (PG). He rarely showed interest in anything remotely “tech.”
Yet during the summer of our discontent — when technology shares plummeted alongside double-dip recession fears [...] Continue Reading...
Here’s a disclaimer from the get-go. If the European Union fails to persuade the world that they’ve got a workable, TARP-like plan on Wednesday, feel free to disregard these 3 reasons to add more Stock ETFs to your current allocation.
1. 2008 Or 1998? Endless comparisons have been made between 2011’s sovereign debt toxicity and 2008’s subprime loan [...] Continue Reading...
Many folks are “banking” on a year-end rally. The catalyst? The European Union (EU) will come up with a massive recapitalization (a.k.a. bailout) of their financial institutions.
In theory, if we no longer need to fret the collapse of the EU — the solvency of member nations, the functionality of its banks, etc. – investors should be able to return to corporate earnings. And most should like [...] Continue Reading...
Everyone seems to recall the phrase, “irrational exuberance.” The description is most frequently tied to the dot-com frenzy and subsequent bursting of the info-tech bubble at the turn of the century.
Yet Fed Chairman Alan Greenspan first uttered the words on December 5, 1996. In fact, it took nearly 4 more years before the stock balloon popped in March of 2000. [...] Continue Reading...
Are you wondering if the market can go significantly higher by year end? Maybe your question should take the U.S. market’s remarkable resilience into account.
Specifically, the S&P 500 has not closed in bear market territory. In fact, the large-cap barometer would have to close below 1096 to get there. Yet, with the exception of a few scary moments, the gauge has demonstrated its [...] Continue Reading...
In spite of significant corrective activity in U.S. stock assets… in spite of bears clawing away at a number of foreign stock assets… the most popular company on the planet remains unharmed. In fact, shares of Apple hit a new all-time high on September 20, 2011.
Everyone is “gaga” for Apple stock. That includes you, me… even the guy who takes [...] 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...
