Salient to Investors: The market drop this week looks more like a trivial downward bounce within a consistent range and a much-needed breather than a catastrophe in the making. Markets were priced for perfection in a world economy far from perfect. $100 invested in stocks still buys only $5.59 in earnings, versus
READ MORE... →Salient to Investors: Many times since WWII, the US stock market has recovered after sell-offs on problems overseas. The US economy remains resilient. Gina C. Martin Adams at Wells Fargo Securities said there is a relatively more ominous slowdown in emerging markets. Markit’s survey of business sentiment indicates a modest pickup in Eurozone
READ MORE... →Salient to Investors: David Stockman writes: The bull market is dead, yet stock option addicted corporate executives are buying their own drastically over-priced shares hand-over-fist. Corporate stock buybacks and dividends are back to late 2007 levels of all of net income, lured by 80 months of ZIRP and $3.5 trillion of debt monetization by
READ MORE... →Salient to Investors: James Hickman writes: Uninterrupted streaks in which the S&P 500 closes within 10% of its all time peak historically precede sudden declines: viz the tech bubble of the 1990s and the credit/housing bubble of the 2000s. The median decline from the peak is 43% and typically takes 13
READ MORE... →Salient to Investors: Rich Weiss at American Century Investments said no one expects real economic growth in the US so Laszlo Birinyi’s prediction of 3200 on the SPX comes 5 years late. Weiss said GDP growth of 3% or less and possible Fed tightening does not support such a rise. Mark
READ MORE... →David Stockman writes: Amazon’s valuation, its one day gain and last week’s Google gain are reminiscent of the days before the tech wreck 15 years ago. The 12 Big Cap Techs of 2000 saw their peak combined valuation of $3.8 trillion plunge to $875 billion a decade later, even as their sales
READ MORE... →Salient to Investors: David Stockman writes: Google’s unwarranted market cap gain last Friday – 75% of the 9.6% gain in net income from the prior quarter was due to a lower tax rate and a cutback of ballooning G&A expenses – easily passed in one day the entire $50 billion market cap of Caterpillar, though only
READ MORE... →Salient to Investors: Jordan Wathen at TMFValueMagnet writes: Eyquem found that from 1951 to 2013, the lowest PE decile of stocks compounded annual returns of 16.7% versus 9.3% for the highest decile. Never pile in or out of an investment for the simple fear of falling behind. No one gets fired
READ MORE... →Salient to Investors: The S&P 500 has closed at new highs 33 times in 2014, while less than 6% of stocks are in bear markets. 47% of Nasdaq Composite stocks and over 40% of Russell 2000 and Bloomberg IPO Index stocks are at least 20% off their 12-month highs. 45% of
READ MORE... →Salient to Investors: P/E ratios among the 50 largest companies in the S&P 500 Index deviate from the mean by an average 22%, nearly the lowest on record since 1990. An average of 380 Index companies rose in each of the last 5 years, versus 307 in the 1990s. In 2007,
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