Displaying items by tag: bull market

(New York)

A lot of investors are nervous to put their money back in markets. The big losses of December have given way to a great start to the year, but investors are still shy because of the volatility. Well, JP Morgan says investors need to get back in markets soon as waiting for analysts to turn bullish again has a history of being a poor idea. Generally speaking, analysts can be a year behind actual market moves, so if investors wait until the mood improves, they will have already missed out on a lot of the gains.

FINSUM: Worries about forthcoming earnings aside, the market definitely has a renewed spring in its step and we are generally feeling bullish given the now lower valuations.

(New York)

December was the worst month for stocks since the Financial Crisis. It was a bleak for almost all investors. Then something magical happened—we just had the best January in thirty years. Forget the shutdown and the polar vortex, the S&P 500 rose a whopping 7.9% in the month. Banks and smaller companies did particularly well, outpacing the broader market. The market has been calmed by much more soothing language from the Fed, which has lessened fears about a recession.

FINSUM: What a month it was for stocks! We think the market had a very healthy correction which put earnings multiples back into a reasonable place, and there is a much better runway from here.

(New York)

There has been a lot of bearish sentiment over the last couple of months, with more of a positive trend lately. Put this piece in the positive bucket. The argument in question is from Capital Group, a $1.8 tn manager, who contends that while we are in the late stage of an economic cycle, there should still be a couple years of good earnings growth and returns. The late stage of an economic cycle typically lasts 1-3 years, says Capital Group, and that shouldn’t be any different this time. According to the the firm, “Given that this expansion has been pretty measured, I think we’re expecting that the late stage of the cycle will probably also be quite measured as well … And it doesn’t have to end in a recession”.

FINSUM: We really like that final thought. Everything about this market and economy has been steady for years. A slow and steady end makes sense.

(New York)

Here is an eye opener- by some measures this was the worst year for markets in at least a century. Through early November, 89% of assets had delivered losses for the year, the worst market wide performance in a 100 years, according to Deutsche Bank. However, with the new truce between China and the US, many assets are moving into the black for the year. Also, the jump in oil bodes well for the energy sector as well as high yield bonds.

FINSUM: A lot of the near-term gloom got cleared up this weekend, and it seems possible that markets could have a nice end-of-year bull run.

(New York)

One of the pillars of this nearly decade-long bull market has been the growing profits of US corporations. US stocks have seen their profit margins rise steadily since 2009 and are around a record mark of 10%. Analysts continue to forecast growth to around 12% in 2020. At the beginning of the 1990s, margins were just half of now. However, this narrative is fraught as just 10 stocks account for around 50% of all the margin growth in the S&P 500 since 2009. Those stocks? All tech, unsurprisingly. But what it means is that many other companies are not as healthy as many assumed, and as we enter a tougher era for margins, including higher labor costs, increased input costs, and higher interest costs, there could be some steep falls.

FINSUM: We think this is a reason to worry, as when margins really start to fall on the back of higher rates and costs, investors are going to be very alarmed.