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Eric Nuttall s Top Picks: May 28, 2021
AMC s embrace of day-trading crowd leads to dizzying rally
Wall Street pros are as baffled as anyone by the dollarâs fate
Gates divorce forces US$50-billion foundation to weigh changes
U.S. Justice Department opens probe into Archegos blowup
Lorne Steinberg s Top Picks: May 27, 2021
U.S stocks rise as strong data rekindle value rotation
Small caps take the lead in broad stock rotation
Kevin Burkett s Top Picks: May 26, 2021
Bank of Canada digital currency would be greener than Bitcoin, deputy says
Bitcoin bounces off highs as crypto market volatility increases
Green bond seller investing in coal shows how tricky ESG can be
You’re never sure what earnings seasons will bring. Hence their volatility. But one thing is certain about the first-quarter results about to be disclosed. They couldn’t matter less to the market’s current valuations.
And while it’s a Wall Street cliche that “the guidance is what matters,” that view is being taken to absurd extents right now, when the S&P 500 is pricing in profits that virtually cannot materialize in two years. That’s a level of faith in the future that history gives little basis for justifying.
Here’s the math. Based on existing analyst forecasts for earnings in all of 2021, the S&P 500 trades at almost 24 times estimates, among its highest valuations ever. To bring the multiple down to its long-term average of 16 times annual profits, companies in the gauge will have to make about 15% more than the equity researchers currently expect them to earn in 2023.