Siegel Bullish On Siegel's Bullishness: Still Bearish?
There is still a ton of good out there. You have to pay attention:
Earnings Are Doing Great In Q2
For perspective, our earnings estimates for Amazon (AMZN) have been $2.00 below the street for next year. Our estimates for the second half have been well below the street as well.
Twitter, same thing. We can't get there on these stocks.
Our top stock picks have been Facebook (FB) and NVIDIA (NVDA). Based on where we see earnings going those stocks are still cheap.
Best Quarter Ever: The Stats Prove It
For all the bears, please, let's look a the facts. Headlines and opinions are nice, but let's look at the facts.
Factset has the facts (hey!). They said (Pay attention),
"77% [of S&P companies who reported in Q2] have reported sales above estimates. If 77% is the final percentage for the quarter, it will mark the highest percentage of companies reporting sales above estimates for a quarter since FactSet began tracking the data in Q3 2008."
Not bad right? Still bearish?
Factset said that Q1 earnings growth was the highest in almost six years.
Still bearish? Why?
Earnings drive stocks. Trump headlines do not, not any more. Maybe never have. (Homework: Please meditate on that one over the weekend. Please.)
And Siegel, The Other Siegel
World famous economist and (correct) stock market prognosticator Jeremy Siegel made an amazing point. Smart people make amazingly simple smart points.
The VIX that everybody's worried about... please listen to what Dr. Siegel told CNBC,
"The fact that volatility is low now is more inline with what we actually see economically out there [rather] than all the crazy volatility that we often got in the past.... Given economic fundamentals we shouldn't have as much short run volatility in the market as we've seen. It may be that the VIX is not really telling us there is too much complacency there in the market."
The VIX is low because fundamental volatility is low not because of complacency.
We love following the AAII to see where investors stand. AAII tracks individual investor sentiment. Despite the market hitting more all-time highs net-optimism didn't change that much. In fact they said,
"Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 1.0 percentage points to 34.5%. Optimism remains below its historic average."
Still bearish? Why?
Only one-third of all investors are bullish despite the market at all time highs. When everybody gives up worrying about Trump and all the headlines they will need to buy. That 34.5% needs to get to 70.5% before we start worrying about a top.
And when that 34.5% goes to 70.5% what do you think will happen to stocks? Stocks will have gone up because 35% will have needed to buy to get to 70.5%.
Elazar, Ok Ok, I'm Bullish, I Gotta Go
No conclusion necessary. Enjoy the ride and have a great weekend.
Reading Comprehension Time
Jeremy Siegel is
A) Elazar's Chaim Siegel's long-lost uncle.
B) Ivanka Trump's long-lost uncle.
C) Steve Bannon's long-lost uncle.
D) Is the star bull economist from Wharton who's been right.
By: Chaim Siegel, Elazar Advisors, LLC, Happy and profitable trading!
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