What’s with all this talk about rising wages? Wages ARE NOT rising for the middle class......they are not.
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Crash as the walls come tumbling down.
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Predicting 2019 based on Q4 earnings or reflecting on the past ten years growth are not dependable indicators of future returns. Typically there are few measures a president can do to affect the market but we're seeing an unprecidented destabilizing force at work with our current occupant. Increasing debt, decreasing revenue and destabilizing global trade will affect our bottom lines. The bull market has run it's course and we'll see corporate strategies transition to conservative defense postures preserving capital, contracting, and squeezing profits from labor reductions. I agree with earlier posts, a conservative mix of personal investing is a wise decision for the next 18-24 months but good opportunities to buy low priced equities will be available.
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China is over-extended, the question is, when will the chickens come home to roost? Our trade war is not helping many, and the shutdown only adds to the woe. At times I wonder if trump's actual intent is to destroy our economy, but then i recall that he did this with his own businesses. Putin chose wisely.
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Nice article. The basic takeaway: an individual investor needing access to their money in the next year or two would be wise to keep it in safer investments like money market accounts or online savings accounts. For long-term retirement investors: get your tubs ready because 2019 might be a great time to pick up chunks of companies at different points during the year at nice discount prices!
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The reason this was “the worst year for stocks in a decade” is because the stock market went up tremendously this past decade. If you have ten runners in a race, one of them, by definition, will have to be “the worst one.” So, 2018 was the “last place” runner. Really, so not a big deal. The markets go up and the markets go down. That’s what they do. That’s what they’ve been doing for over 100 years. And that that’s what they will continue to do. After 9 up years, 1 small down year should be expected. Anyone complaining about this most recent down year either (1) had no business being in the stock market in the first place or (2) had too much of their portfolio in the stock market relative to their age and liquidity needs.
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The super quarterly profit growth in 2018 appears to be followed by negative numbers in 2019, if mean reversing works properly. To me, a sustained federal budget at 1T plus Fed QT will see huge deflationary pressure on the entire economy, mainly through higher interest rates and sudden disappearance of liquidity. Debt fueled economy comes to a day to pay back its excess.
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"For large employers, rising wages will cut into profits unless they find a way to get customers to pay higher prices."
There are more ways employers can get a positive return on investment in employees. employees may turnover less, and save the company money on recruiting and training. higher paid employees can boost customer satisfaction and thus spur more referrals and grow top line revenue. higher paid employees can invent new products and services. in sum, employees are an asset. and return on assets can be achieved many ways. CEOs who truly manage people as an asset can outperform those who only view staff as a cost to be reduced.
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If corporations are still faking their numbers- I trust investors’ gut more.
During the s l crisis- they were reporting profits as the regulators closed them for insolvency ...... Of course that was Back in the day when we HAD regulators who believed in fraud by white collar criminals- and over 1000 went to jail!
Now we don’t have regulators or regulations with any teeth
The next crash will take us under.
Google bill Moyers and William K Black
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@Mallory Buckingham Thanks for the Moyers and Black tip.
...good article.
It wasn't the Fed that caused the recent correction - even though the pundits would like you to believe that....
...the DJIA was at 8,885 in 2009 -just 10 years ago.
..today, it closed at 24,001...….
..you do the math...if you don't think there's more Room to Move (great song by John Mayall), you're watching too much Mad Money.
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@JMS It was also about 14,000 in 2007, so not sure what your point is, it goes up and it goes down. The p/e is the more relative metric.
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Wasn't the depression in corporate profits in 2015/6 partially related to the sudden drop in oil prices from $100/barrel to the $20's? Oil prices rebounded to $76/barrel in 2018, but fell to the $40's in Q4. This will not have a negative effect of the same magnitude in Q4/2018 and 2019, but some surely? Now that the US is arguably the world's largest oil and gas producer, lower oil and gas prices are not necessarily a benefit. The other there is hardly any data for Q4/2018 corporate profits, never mind Q1/2019. By how much will corporate profits grow in Q1/2019, when the positive impact of corporate tax cuts has subsided?
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