Thursday, January 26, 2012

Earnings Shortfalls Likely to Restrain Equity Gains

With major U.S. equity indexes near their post-2009 highs (only 2-3% from the high on the S & P 500), I've urged investors to raise some cash.  

I have been particularly concerned about high profit expectations for 2012.  I think it's probable that individual stocks especially are at risk of earnings shortfalls.  Though some companies (McDonald's and Apple, e.g.) reported strong results, others across various sectors (banking, drugs, industrials) revealed disturbing trends, particularly late in the quarter.  I still think two of the main risks are difficult comparisons and reduced currency translations from a stronger U.S. dollar.

Raising cash still is the most compelling immediate investment move, in my opinion.

Steve Lehman

S & P 500:  1317

No comments:

Post a Comment