Goldman Sach’s David Kostin created this chart comparing earnings peaks with market action.
In addition to showing how overpriced the market was in 1999/2000, it suggests an SPX peak relative to current ( estimate of a near term peak) his earnings:
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click for bigger chart
Goldman Sachs chart via ZeroHedge
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Money is power, & you ought to be reasonably ambitious to have it." —Russell H. Conwell, Temple Univ, 1877
"It's the end of the world as we know it and I feel fine" say the French as consumer confidence in May rose to the highest since Nov '10 as they welcome and get excited about new Pres Hollande. Also, the French 10 yr bond yield touched the lowest on record this morning. June consumer confidence in Germany held at 5.7, just .2 pts off the highest since Mar '11. To the euro bond debate which is now taking on greater rhetoric with those with high bond yields wanting them and those with low ones saying no way, ECB member...
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October 18th, 2010 at 2:42 pm
[...] Market valuations provide room for an upside surprise. (ValuePlays also Big Picture) [...]
October 18th, 2010 at 3:15 pm
it’d be interesting see this chart overlaid with a chart of other secular bear markets.
if the beginning of a secular bull is marked by an obviously (in hindsight, BLINDINGLY obvious) cheap market (based on p/e or p/b or whatever), do we see a market where stock prices never get to their previous highs, and then crash anyway, all while earnings stay close to highs?
hmmmm…
October 18th, 2010 at 3:53 pm
“…”Exactly what kind of meat is this, sir?”
“It’s just meat; it’s good” he assures you, nodding and grinning.
That’s about as much clarity you’ll get on bank books these days.
Changes to accounting rules have made balance sheets in the sector a farce. Like the change that allows banks to value holdings at what they say they’re worth, rather than what somebody would actually pay for it.
It’s known as mark-to-imagination accounting. That’s opposed to mark-to-market accounting, in which securities are valued based on what people will actually pay for them.
These accounting changes were supposed to be temporary, but like Milton Friedman said, “Nothing is so permanent as a temporary government program.”
So the game is extend and pretend.
It can’t last forever, of course, which is why I’m steering clear of bank stocks…”
http://www.wealthdaily.com/articles/avoid-financial-stocks-buy-tech-commodities/2778
yea, is it, only, ‘Bank Stocks’ ?
October 18th, 2010 at 3:55 pm
[...] Peak Earnings Versus Stock Peaks “Goldman Sach’s David Kostin created this chart comparing earnings peaks with market action.” [The Big Picture] [...]
October 18th, 2010 at 4:03 pm
I would LOVE to hear Golman explain how we are going to get to $90 EPS.
October 18th, 2010 at 8:45 pm
Earnings growing this strongly with Main Street in such bad shape makes me wonder how overseas sales figure in this.
October 19th, 2010 at 7:57 pm
I think it a mistake to look at this EPS v. SPX comparison in isolation from dynamics involved in the evolution of a credit bubble’s inflation and popping, particularly now that a non-trivial matter of systemic fraud has entered into the picture.