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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Proud Deplorable who wrote (87401)	10/7/2007 7:42:33 PM
From: Giordano Bruno	Respond to of 110194

The story that changed this week, other than the one that HB&B have their act together in writing off gazillions of dollars of asset-backed paper of dubious quality, is that over the horizon the corporate earnings picture is brightening. Somehow, opines S&P and Thomson Financial analysts, the earnings of the Tech sector will grow +20 pct to +22 pct per annum over the next five quarters. Presumably, they cannot see past the next five quarters. I’m left wondering if they can see into the current one. In fact, I made a statement this week about the possibility they are smoking stuff that warps the brain. However, trading being what it is, it behooves us to investigate because that’s the kind of number that buyers want to hear, and there could be a lot of buying. Net buying, of course, raises prices, and we trade prices. We like to buy them low and sell them high. Problem is they are already high. So we must be extra cautious. These analysts have fooled us before you know. Why, it was just in March 2000, at the apex of the corner of the previous Bull market – right before the collapse – that 98.5 pct of all analysts recommendations for Dow 30 stocks were Strong Buy, Buy or Hold. That meant just 1.5 pct recommended a Sell or Strong Sell. Although in March 2000 the correct decision for the great majority would have been to listen only to the Strong Sell recommendations, there were so few of them you missed them simply by blinking. But our heads were spinning at the line-up of Talking Heads from Wall Street to CNBC Street to tell us their parent company, the venerable General Electric, had a stock that was under-priced at 50 times earnings. Oh, the mind boggles at the stuff that comes out of the mouths of Wall Streeters, at times. So, now we are left wondering if this 20-22 pct annualized earnings figure for the Tech sector is credible and incredible or simply lacks credibility. They have thrown down the gauntlet; now it’s our call. A good read, thanks. It speaks to an earlier post," the triumph of engineered euphoria over evidence."