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: Jason Zweig of The Intelligent Investor writes: Don’t join any panic. The market can fall by at least 50% but no one can predict when. Studies show that over time, performance chasing reduces returns by an average of 1.5% per annum; a big bite in a market where the long-term inflation-adjusted
READ MORE... →Salient to Investors: Mark Hulbert writes: The stock market may be overvalued and could begin a bear market but it does not resemble the bubble market in 2000. The explosion of bubble warnings is unwarranted. The 5 identifiers found by JeffreyWurgler at NYU and Malcolm Baker at Harvard in stock market
READ MORE... →Salient to Investors: David Stockman writes: Laszlo Birinyi says S&P 3200 will be reached by 2017 because there is no reason it cannot keep rising. Since first meeting Birinyi in 1986, I do not ever recall when he was not bullish on equities. His call is wrong because the central bank fed 30-year bull run
READ MORE... →Salient to Investors: Laszlo Birinyi said: The market is now so dominated by institutional investors, hedge funds and service industries, that sentiment drives prices more than anything else, so predictions based on valuation data going back a hundred years are bound to fail. Recent developments in Amazon, Google, and Chipotle clearly show
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
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