By Adam Hamilton – Re-Blogged From Silver Phoenix
The mega-cap stocks that dominate the US markets are just finishing another monster earnings season. It wasn’t just profits that soared under Republicans’ big corporate tax cuts, but sales surged too. That’s no mean feat for massive mature companies, but sustained growth at this torrid pace is impossible. So peak-earnings fears continue to mount while valuations shoot even higher into dangerous bubble territory.
By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com
The highly-anticipated first-quarter earnings season is in full swing, with traders eager to see how US companies are faring. While expectations are low, these profits releases still collectively pose serious risks for today’s overvalued and overextended US stock markets. A few high-profile misses could prove all it takes to unleash a long-overdue serious selloff. Investors and speculators alike need to remain wary.
The US stock markets’ latest record highs have left traders exceedingly euphoric and complacent. They are utterly convinced this stock bull will power higher for years to come. But their enthusiasm is very misplaced. In real inflation-adjusted terms, the US stock markets only just regained breakeven levels 15 years after the last secular bull peaked. Now the secular stock bear ever since is overdue for a new cyclical bear.
The flagship benchmark index for tracking the US stock markets is the mighty S&P 500, often shortened to SPX. The whole financial world literally revolves around this dominant index, with most global equity markets and even some major commodities markets like oil usually mirroring it. American stock traders can directly trade the SPX through a handful of gargantuan ETFs including the leading SPY S&P 500 ETF.
Here at US-Issues.com, we deal with “Political Issues of Economic Importance.” Most Americans own stocks, either directly or through some kind of retirement plan. For them, whether stocks will be continuing to go up or will start to head down is of exceptional importance. The fact that market ups and downs are influenced greatly by government policy also makes this a political issue. Please enjoy this piece from Adam Hamilton.
————————————-
Guest Post by Adam Hamilton
The prevailing valuations in the lofty US stock markets are increasingly becoming a bone of contention. Wall Street calmly asserts stocks are fairly valued or even cheap, since it has a huge vested interest in keeping people fully-invested. But a growing chorus of dissenters is disputing that idyllic notion, warning that stock valuations are very high and portend great downside risk. Indeed, topping valuations abound.
Since investing is all about buying low and selling high, the price paid for any investment is everything. Buy good companies at cheap prices, and you’ll multiply your wealth over time. But buying those very same good companies at expensive prices radically stunts future gains. While cheap investments have great potential to
