What word to use to describe the releases this earnings season? Wretched? Appalling? Thoroughly dispiriting? An economic quagmire of leviathan proportions?
Bad. The earnings news is bad. When even Apple, which can't keep the new iPhone 3G on the shelves, is warning that it expects lean times ahead, you know things are pretty awful.
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You do realize that they do this *every* quarter, right?
http://bullcross.blogspot.com/2008/07/whats-with-irrational-preoccupation-of.html
Why did I have to become an adult in the terrible 2000s? Why tease me with my teenaged years in the bountiful, war-free 90s?
Aw c'mon Megan: From what I've seen, they don't strike me as THAT bad, outside of financials of course. Apple loves to low ball, esp Q4. Their Q3 earnings were pretty good, and beat expectations by a good amount.
Why tease me with my teenaged years in the bountiful, war-free 90s?
It's to punish you for paying attention to this sort of crap during your teenage years, when you should have been drooling over your short-skirted classmates instead.
"Why did I have to become an adult in the terrible 2000s? Why tease me with my teenaged years in the bountiful, war-free 90s?"
What the hell are you talking about? Most of the 00s have been great economic times. Further, the early and mid 90s were, while not bad historically, not particularly great times. Bill Clinton ran of 5%+ unemployment as a booming economy. My how our expectations have changed.
Back in high school I had about as much influence over my short-skirted classmates as I had on the economy or the military.
What word to use to describe the releases this earnings season?
Republican. Next question.
Mister Market has happy periods, Mister Market has unhappy periods. Over time, there's a bit more happy than unhappy and folks who keep contributing to their 401ks don't have to eat cat food after they retire, and that's a good thing. But that doesn't make the unhappy times less unhappy right here in the moment.
Phil Gramm adds Megan to the whiner list...
My read: time to load up on equities.
Some company earnings have been very, very good while some are poor. Economics and particularly market sectors are cyclical. Values of stocks and company performance and/or profitability are also not reflective of each other; and Apple is a perfect example. You're making the mistake of following the financial media lemmings - they (like the rest of media) focus on the bad because fear drives ratings.
Not meant to pick on John, but just to illuminate the convo...
The S&P 500 is at the same level as it was 7 years ago. No net progress since July of '01, so if you just keep contributing to that 401K, you'd better hope that the next 10-15 years (or whatever your time horizon) is better than the past 7. Oh, and houses are always a good investment too..
gab:
Yes, although if you go to a more natural 10-year span, return is about 6% (not annualized - still lousy). But you can't just look at capital gains; dividend yield for the S&P 500 is over 2% now (!), so your total return even over this terrible period isn't much worse than many savings accounts.
(Not to mention, presumably one would put a modest fraction of a 401k in a foreign index, which has done quite well over that period...)
As some others have noted, this is an Apple thing. They always do this, and people always freak out. There's no need to be alarmed because of Apple. There are many alarming things out there, but Apple probably isn't one of them at the moment.
Some company earnings have been very, very good while some are poor.
True. During the current administration, business which cater to the ultra-rich have tended to do very, very well. For some reason.
Three things:
1. Firms always set their earnings estimates on the conservative side so that they don't drastically miss their earnings estimates (See GE earlier this year).
2. Now is a good time for healthy firms to be investing in new systems, properties, personnel etc. because the relative costs of all of these has dropped. Unless the revenue estimates are really grim I wouldn't panic.
3. Most of these estimates were made with all the chicken-little voices screaming two weeks ago.
Republican? I thought the Democrats took both House and Senate. I'm going to be charitable and blame both parties.
If you think this is bad, you should have graduated in the 1960s. Your chances of getting drafted are zero. The Carter years were not too hot either. I also remember a mortgage interest rate of almost 12%. I actually got an across the board salary increase just to try to help us keep up with inflation.
Depends on the company and the industry it's in. Graham Corp. (GHM) will probably announce great earnings for Q2 when it has its conference call. I'm going to bet we'll see some nice earnings from Atlantic sponsor Exxon Mobil too. Agrium's earnings probably won't be in the doldrums either. And so on.
I dunno John, there have been two recessions during this administrations compared to one in the last one. That probably makes people feel a lot less happy than before. Not to mention, the expansion during the 90s was a major boom that doesn't happens once or twice in a lifetime.
Using unemployment as a measure is a pretty bad, especially with advances in technology. When I was in college, the consensus on NAIRU was 5.5-6%. Now it's probably closer to 4.5-5%, which is a huge difference in the grand scheme of things.
Mo,
So far, the present situation doesn't technically qualify as a recession (I expect that to change, however), but the so-called 1st Bush recession belongs to Clinton (not that he was really to blame either, but the downturn started while he was still in office).
And even the one recession in Clinton's terms that you seem to point to actually started and ended in Bush Senior's term in office.
Wandered by a large power-yacht brokerage here in TampaBay a couple of months ago. They were having trouble keeping their merchandise in stock.
As someone noted, some businesses go up and some go down. Wonder if the Porche dealer is offering zero percent loans? What the hell, I'm not working so I might go check.
I also remember a mortgage interest rate of almost 12%.
Buying a house when the mortgage interest rate is 12% is a great thing. And I'm not kidding. It's great because the sales price of the house reflects the interest rate at the time, so high-interest rates == low prices. And then, when interest rates inevitably decline, you refinance, which cuts your monthly cost AND the market price of the house inflates in proportion to the drop in rates, so you win there too (either by selling or pulling out equity).
Gab,
We are in a secular bear or range-bound (to use Vitaliy Kastenelson's phrase) market for stocks. It will probably last for roughly as long as the last secular bull market (1982-2000) did. In such a market, an investment in S&P 500 index funds will be dead money or worse for years.
DaveinHackensack, it would be nice if each period of stock market underperformance lasted as long as the preceding period of stock market overperformance, but history reveals no such rule at work. The only sure thing that can be said is that the stock market will be range-bound or worse until it breaks out of the range on the upside, at which time it will outperform alternative investments for a time.
Speaking of market timing, did anyone else note that Ms. McArdle called the top of the oil market rather precisely? I suspect that she is one of those John Maynard Keynes types who makes millions by doing some speculative arbitrage for a half hour each morning before starting his or her real work. Only occasionally does the mask slip.
"I dunno John, there have been two recessions during this administrations compared to one in the last one. "
You really don't know. 2001 was not a recession, it was one quarter of 0 growth that occurred after 9-11. I am not sure that this qualifies as a "recession". I have yet to see one quarter of contraction letalone consectutive ones.
"I dunno John, there have been two recessions during this administrations compared to one in the last one. "
You really don't know. 2001 was not a recession, it was one quarter of 0 growth that occurred after 9-11. I am not sure that this qualifies as a "recession". I have yet to see one quarter of contraction letalone consectutive ones.
y81,
My initial response to you was held for blogger approval (due to the links I posted). If you want to see the historical basis for Vitaliy Kastenelson's claim that secular bull markets tend to be followed by secular range-bound markets of similar length, click on my name, which will take you to a post about Vitaliy Katsenelson's thesis, and then check out slides 3 and 4 of the PDF by him that I link to there. You may also be interested in a two-part post where I compare Katsenelson's thesis with that of Jim Rogers.
BTW, do you really think that Megan called the top of the secular bull market in oil, as opposed to a cyclical peak?
BTW, do you really think that Megan called the top of the secular bull market in oil, as opposed to a cyclical peak?
So, what happens if the Vatican Bank starts speculating in oil futures?
So, what happens if the Vatican Bank starts speculating in oil futures?
We'll dispatch SoV and Mixner to make them stop. And film it for reality TV!
We need more progressive taxes, more WPA-style "make-work" programs and more ideological bashing of the rich. I suggest a weekly 2-minute hate where we all gather in the town square and scream at the rich people.
gab: and there is the best argument against index funds I've heard in ages.
We need more progressive taxes, more WPA-style "make-work" programs and more ideological bashing of the rich. I suggest a weekly 2-minute hate where we all gather in the town square and scream at the rich people.
Yeah, man. Lord knows the rich in this society just can't catch a break.
We'll dispatch SoV and Mixner to make them stop. And film it for reality TV!
But if it's those two, it will have no connection to reality. But if it's related to TV, it's not reality anyway. But if it's called reality television, it should be real. But...
Hold onto that thought for a moment, I need to go flip several coins.
How about earnings are "adjusting"? Given that the housing market was on an insane ride fueled by the Federal Reserve, the economy has to adjust away from serving the madness.
Meg is sad. Squish squish. Put a 2X4 luv, you'll feel better.