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I keep an eye on S&P 500 earnings. As of March 31, they were at an all time high [0]. This is irrespective of the stock market valuation. Profit is the underlyi

I keep an eye on S&P 500 earnings. As of March 31, they were at an all time high [0]. This is irrespective of the stock market valuation. Profit is the underlying value, and that remains very strong. What changes is the sentiment of investors and whether they collectively believe improvement will continue. If yes, then stock values will continue to rise. In the mean time, profits can continue to increase while stock values drop. I would not be concerned about that. [0] https://www.multpl.com/s-p-500-earnings/table/by-year https://www.multpl.com/s-p-500-earnings/table/by-year

devoply 7y ago
Ever heard of locking in profits? Most investors have. And also telling them that the stock market is likely to collapse is going to make them lock in profits.
- 11thEarlOfMar 7y ago
  Definitely have heard of it. I locked in my profit on AMZN at $63/share. I'm not a trader, have no confidence I can time the market. I buy for long term hold (expect the company to take a major share of a growing market) and for dividends. In the case of the dividend investments, if the stock appreciates substantially (60%+) then yes, I do sell it and lock in the profit, reinvest in a higher yielding stock. But I don't try to time it.
nemo44x 7y ago
If the USD could get more fairly valued against the Euro and Pound we’d see profits skyrocket. This will happen eventually, I figure after Brexit, but as of today the USD is too strongly valued.
- danielscrubs 7y ago
  the market decides what’s fair, no? What do you propose?
  - nemo44x 7y ago
    Time. EU did too much austerity. They are in the middle of a dovish cycle and also in crisis with Brexit. Once this is sorted and the consequences are more clear then interest rates should rise there.
    - danielscrubs 7y ago
      Have you seen the historical forecasts on interest rates compared to what actually happens for a couple of decades? https://obamawhitehouse.archives.gov/sites/default/files/image/charts/chart1_%20Historical_Rates_Forecasts_blogcharts.jpg https://obamawhitehouse.archives.gov/sites/default/files/ima... http://www.brfekoxen.com/wp-content/uploads/2016/03/riksbankens-igelkott-28-oct-28-riks.png http://www.brfekoxen.com/wp-content/uploads/2016/03/riksbank...
granshaw 7y ago
The US is the most megacorp friendly market in the world. Competition and the number of publicly traded companies are at an al time low, while profitability is at an all time high (effect of tax breaks notwithstanding) Thus it might not be the best barometer of the global economy
dehrmann 7y ago
I'd still like to see those earnings numbers normalized against something like population of developed countries.
kgwgk 7y ago
If you look at monthy data to make it more interesting, there are 12-month trailing earnings (inflation adjusted) up to March 31 on that page and the all-time-high is $135.48 on Feb 28 (I think that remains the all-time-high as of the end of Q2, but that's not important). Before the 2008 recession[1], the market peaked in October 2007. Earnings had reached the all-time-high ($104.38 inflation adjusted) on Jun 30, 2007. Over the following twelve months (second half of 2007/first half of 2008) earnings were $60.12, and over the next twelve months 2008/09 just $8.92. Earnings improved from there, but it still took 4 additional years to get back to $100 of earnings over a twelve months period ($78.84 on 2009/10, $95.15 on 2010/11, $98.12 on 2011/12). [1] GDP growth remained positive in the first half of 2008 but by the end of the year it was officially decided that the recession had actually started in Decemeber 2007.

devoply 7y ago

Ever heard of locking in profits? Most investors have. And also telling them that the stock market is likely to collapse is going to make them lock in profits.

11thEarlOfMar 7y ago
Definitely have heard of it. I locked in my profit on AMZN at $63/share. I'm not a trader, have no confidence I can time the market. I buy for long term hold (expect the company to take a major share of a growing market) and for dividends. In the case of the dividend investments, if the stock appreciates substantially (60%+) then yes, I do sell it and lock in the profit, reinvest in a higher yielding stock. But I don't try to time it.

nemo44x 7y ago

If the USD could get more fairly valued against the Euro and Pound we’d see profits skyrocket. This will happen eventually, I figure after Brexit, but as of today the USD is too strongly valued.

danielscrubs 7y ago
the market decides what’s fair, no? What do you propose?
- nemo44x 7y ago
  Time. EU did too much austerity. They are in the middle of a dovish cycle and also in crisis with Brexit. Once this is sorted and the consequences are more clear then interest rates should rise there.
  - danielscrubs 7y ago
    Have you seen the historical forecasts on interest rates compared to what actually happens for a couple of decades? https://obamawhitehouse.archives.gov/sites/default/files/image/charts/chart1_%20Historical_Rates_Forecasts_blogcharts.jpg https://obamawhitehouse.archives.gov/sites/default/files/ima... http://www.brfekoxen.com/wp-content/uploads/2016/03/riksbankens-igelkott-28-oct-28-riks.png http://www.brfekoxen.com/wp-content/uploads/2016/03/riksbank...

granshaw 7y ago

The US is the most megacorp friendly market in the world. Competition and the number of publicly traded companies are at an al time low, while profitability is at an all time high (effect of tax breaks notwithstanding) Thus it might not be the best barometer of the global economy

dehrmann 7y ago

I'd still like to see those earnings numbers normalized against something like population of developed countries.

kgwgk 7y ago

If you look at monthy data to make it more interesting, there are 12-month trailing earnings (inflation adjusted) up to March 31 on that page and the all-time-high is $135.48 on Feb 28 (I think that remains the all-time-high as of the end of Q2, but that's not important). Before the 2008 recession[1], the market peaked in October 2007. Earnings had reached the all-time-high ($104.38 inflation adjusted) on Jun 30, 2007. Over the following twelve months (second half of 2007/first half of 2008) earnings were $60.12, and over the next twelve months 2008/09 just $8.92. Earnings improved from there, but it still took 4 additional years to get back to $100 of earnings over a twelve months period ($78.84 on 2009/10, $95.15 on 2010/11, $98.12 on 2011/12). [1] GDP growth remained positive in the first half of 2008 but by the end of the year it was officially decided that the recession had actually started in Decemeber 2007.