It’s easy to find talking heads that say this stock market is a buying opportunity, and that some stocks are cheap. Obviously opinions differ. But looking at PE (Price/Earnings ratio), consider this from FT: ”[W] hile the rest of the corporate sector may not suffer as much as financials, current earnings forecasts suggest that it will not suffer at all. For 2008, the market expects S&P 500 earnings to grow 15.1 per cent compared with 2007. This is partly thanks to an expected 26.6 per cent increase for the financials (aided by a low base of comparison). But all sectors are forecast to grow at least 7.2 per cent.” (more…)
Categories: S&P 500 · bear market · bull market · markets · stock markets
Citi says the “great unwind” has begun: We are now confronted by a broad bloodbath in the credit markets,” Citigroup said. ” The most leveraged paper is falling in value because it is leveraged, and now the least leveraged paper is also falling in value because it is owned by leveraged investors.” Investors should also avoid hedge funds themselves, along with private equity, Citi added. Both types of investment rely at least partly on borrowed money to generate returns. <snip> Leveraged economies, like the U.S., should also be avoided, in favor of emerging market countries, which have reduced borrowing, the bank advised. “With less capital sloshing around the world, and the dollar falling, the U.S. may have to compete more to finance its deficits. http://www.marketwatch.com/news/story/great-unwind-has-started-avoid/story.aspx?guid=%7B1DC25DFD%2D3543%2D4CF4%2DBE26%2D74EA4B9C9330%7D&dist=hplatest
Categories: Citigroup · bank failures · banking system · corrections · counterparty · credit markets · deflation · deleveraging · great unwind · unwinding
