I just can’t help but shake my head at yet another unfounded moment in the equities market. Almost every day this week, stocks reached new highs… when will the madness stop?
Blackrock CEO, Larry Fink, pointed out that by GAAP standards, the S&P500 now generates about $90 per share in earnings, giving the index a 24x P/E multiple. There’s no way that fundamentals are driving this move. But, the upcoming earnings season will tell its own tale.
In the meantime, we’ve had an exciting week at Dent Research with two of our Irrational Economics Summit speakers chiming in on how they see the world and what we should expect from them at our October 20-22 conference.
On Wednesday, I wrote a post based on our conversation with Dr. Lacy Hunt, of Hoisington Investment Management where he confirmed what Harry’s been saying for a while now. “Yes,” he told us, “the economy really is that bad, right now.”
And he proceeded to lay this sad truth on us in that post, as well:
“Unfortunately, the economy is performing so poorly that a lot of our college graduates are coming out and they have to settle for jobs that are not much better than what they would’ve received if they had gone directly into the labor force from high school.”
And while we already had an idea that was the case, Dr. Hunt illustrated some unique facets of the current economic crisis that we hadn’t heard before. It was a great conversation, and if you haven’t checked it out yet, it’s definitely worth a read. It will also be well worth your while to meet him and see him live – along with all the other experts on the panel – this October 20-22 at the Irrational Economic Summit in Palm Beach. We have a couple of discounted seats still available. Grab one here, before they’re gone.
We then heard something similar on Friday, when renowned investor and founder of Real Vision TV, Raoul Pal, wrote us a terrifically insightful piece on more economic specifics.
He agrees that we’re headed full bore into a 2016 recession, and there are so many fault lines out there right now that it’s impossible to predict which one will rip free and correct the markets.
As Raoul said:
“See, the business cycle is weakening and so the likelihood for the markets to encounter some sort of accident is quite high (and getting riskier by the day, especially now that markets have made all-time highs).
“The banking system is just one of dozens of dominoes tilting precariously. Something rotten is lurking in the shadows of the world’s largest banks. Banks in Italy, Germany, and Switzerland are all in a free-fall. This has already spilled over into the U.S. banking system, highlighting many weak banks that probably won’t survive a hard hit – like the one that may be coming.”
And lest you think it’s all doom and gloom and there’s no certainty in… anything, our own John DelVecchio branched out from his short trade advice.
He generously provided two stock tips for all of our readers in companies with solid financials that pay you, the stockholder first.
The following is from his Thursday piece:
“Prudent management teams can generate market-thumping returns. My own research into companies with “good shareholder yield” returned over 15x the S&P 500 since 2000.
Good shareholder yield is the focus of our coming newsletter Hidden Profits.
One of the most obvious ways to get paid first is to receive a dividend. Dividends rule. According to the data presented by Ned Davis Research, dividend initiators and growers have compounded at 9.8% since 1972. That would turn $100 into $6,467.”
Dividends are king, even to a forensic accounting expert like John.
And just like that, with all the mad-market craziness, the week is over and here we are on Saturday.
Stay tuned next week for more posts by our upcoming Irrational Economic Summit speakers and insights that you will find no place else, only at Dent Research.
Editorial Director, Dent Research
P.S. Europe has a problem – a big problem – that Harry has been talking about since February, when he dedicated his elite-members-only newsletter, The Leading Edge, to unraveling the details of the disaster looming on the other side of the Atlantic. Yet, only now is the mainstream media starting to talk about this. Why? Why did it take them so long to see what Harry was able to see five months ago? On Harry’s instruction, we’re going to rerun one of Harry’s Economy & Market pieces on this issue next week. We’ll be giving away that Leading Edge issue to anyone interested in seeing how bad this problem really is… and how Harry knew about it so far ahead of everyone else. Watch out for it next week.
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