When you combine +20% earnings growth with a flat market, the multiple compresses. The problem is earnings fall in slowdowns. If those potential negative catalysts end up coming true, stocks will falter because they trade on future estimates, not trailing earnings.
The bad news: The determining factor for how stocks do in the next year is how much estimates fall. In the past few days, the answer is a lot. From November 1st to November 5th Q4 estimates fell from 14.29% growth to 12.95% growth and Q1 estimates fell from 8.39% growth to 7.81% growth.
Related Posts:We truly are under attack. We need user support now more than ever! For as little as $10, you can support the IWB directly – and it only takes a minute. Thank you. 594 views