Take a look at the above chart courtesy of Chartoftheday.com. It illustrates the inflation-adjusted earnings of the S&P going back to 1936. We have just witnessed the largest decline of S&P inflation-adjusted earnings on record. This amounts to about a 90% decline in earnings over a 20 month period. What does this mean? The market seems to have been rallying in expectation of upside surprises. Can earnings drop even lower? This is certainly possible. But, remember, even a limbo contest must end sometime. We seem to be very close to "how-low-can-you-go" earnings. Many market watchers are still predicting the worst is yet to come. Maybe so. Most investors usually get caught behind the curve and miss some great investing opportunities. This is certainly worth noting. Stay tuned.
No comments:
Post a Comment