I would generally not put an article in the BLOG but this one is just unbelievable.
Pls see below extracts from the below article
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The biggest increase in profits in more than a century is telling investors that this is no time to sell stocks, even after the Standard & Poor’s 500 Index rallied 97 percent.
(SS says this is the exact time to sell stocks)
S&P 500 earnings are poised to surpass the 2007 peak of $90 a share in the third quarter after surging from $7 in March 2009, the quickest recovery since at least 1900, according to data from S&P and Yale University’s Robert Shiller compiled by Bloomberg. The gap between projected 12-month profits and average earnings over the last 10 years is set to widen the most since 1951, the data show.
PNC Wealth Management, Federated Investors Inc. and ING Investment Management, which together oversee about $1 trillion, say consumer spending will sustain the recovery after government stimulus helped lift profits from the lowest level since the Great Depression.
(SS says there is no consumer spending going on - go and check the data)
“People are more comfortable with the recovery than at any time over the last couple of years,” said Doug Ramsey, the Minneapolis-based director of research at Leuthold Group, which oversees $3.9 billion and recommended buying equities four days before the bull market started. “That’s typically when retail investors regain courage,” and may spur a rise of up to 25 percent in the S&P 500 during the next 18 months, he said.
(SS says real unemployment rate is increasing)
S&P 500 companies’ 12-month profits are projected to reach a record $91 a share by August, according to estimates compiled by S&P and Bloomberg. That would be the highest-ever level on an inflation-adjusted basis and up almost 13-fold from their low two years ago, S&P and Shiller data compiled by Bloomberg show.
The 50-month rebound in profits, following a 92 percent drop during the global financial crisis, would be faster than the 52 months it took to recover from the bursting of the dot- com bubble in 2000, when earnings fell 55 percent, the data show. Profits didn’t recoup their 67 percent tumble during the Great Depression until 19 years later.
Shiller, whose book “Irrational Exuberance” foreshadowed the end of the 1990s surge in stocks, said in an interview that U.S. equities are “expensive.”
“I view current market conditions as a great opportunity to take risk off the table,” said Rob Arnott, founder of Research Affiliates LLC, which oversees $75 billion in Newport Beach,California.
Profits are being inflated by government attempts to stimulate the economy that won’t last, and earnings will eventually “mean revert,” or fall back toward average levels, according to Arnott, who prefers emerging-market bonds and short-term corporate debt.
“Evidence is building that we have a self-sustaining recovery,” said Stone. “There are corporate profits. There’s the fact that consumer spending is there. Things are getting better.”
(SS says recovery is a dead cat bounce)
“We see accelerating growth around the globe,”Duessel, who turned bullish on U.S. stocks at the beginning of 2009, said in an interview from Pittsburgh. “That helps to continue to propel earnings. This market looks cheap to us.”
(SS says look at Europe, China is slowing too, Gulf is in the midst of inflation related chaos.)
Revenue has “surprised to the upside in these last several quarters,” Duessel said. “Sales are going to be propelled by employment.”
Individual investors “are way underweight equities,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion and boosted stock holdings in April 2009. “The market is nowhere even close to being priced to perfection.”
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I cant find words to express how ignorant the crowd has been.
Let us wait and once we see the peak in equities , I will revisit this article this year and remind everybody about human irrationality.
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