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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Box-By-The-Riviera™ who wrote (52571)12/31/2000 5:14:40 PM
From: UnBelievable  Read Replies (1) of 436258
 
Did Russell Say What He Thought?

In general there is a 10 to 1 relationship between profits and economic growth. That is for every 1% reduction in economic growth there is a 10% reduction in corporate profits.

Even based on the best-case soft landing scenario it is anticipated that growth will decrease by about 2%. If corporate profits decrease at all why would the stock price increase unless they had been trading at PE ratios that were already so low that it could be reasonably said that the slowdown had already been incorporated in share price. This is not the case - even after this year the PE ratio of the major indices remains at historically high levels.

Inflation aside, even under best-case economic projections, there really is no reason to expect stock prices being higher one year from now than they are now.

I guess if you are in the business of selling stock that is not the politically correct thing to say.
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