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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Investor2 who wrote (4240)4/2/1999 5:02:00 PM
From: BigShoulders  Read Replies (2) of 15132
 
S&P Earnings

I2

Thanks for the clarification that reported earnings includes writoffs.

As noted in Justas recent post, it looks like Bob is lowering his forecast for '99 and '00. We'll see what he says in the next news letter.

I thought I read recently that Abby upped her market targets based on forecasts for increased earnings. When I read further, the article said she forecat increased earnings in '00 over '99. The article also said she had lowered her '99 forecast. It looked like '00 was less than previous forecast. Was in a link posted by Wally (I think) a week or so ago.

Maybe I'm reading this wrong but it looked to me that as long as next year's forecast is greater than this year, that is the justification to forecast higher stock prices. What happened last year or currently is irrelevant.
Taken to the extreme, if S&P earnings were forecast to be $10 this year (but down from $46) and forecast to be $15 next year, the forecast 50% increase would be reason for increased stock prices.

In reality S&P earnings have been under pressure for a couple years and the rise in stock prices has led to increased multiples.
Inflation and interest rates need to stay low to support these higher multiples.

Best wishes

BigShoulders

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