I’ve been beefing up our bullish plays on the Watch List.
If we’re going to get more bullish I thought it would be a good time to look for some bullish premises so we don’t feel totally silly paying 20-year high p/e’s for the S&P 500. Obviously, our main hope is that the stocks we buy will grow into their earnings so the next month’s worth of reports will be key. The bar for corporate earnings is still set at very easy to beat levels yet, like this limbo playing child, when they announce their beats of very low expectations we’re going to get all excited and tell them how great they are doing.
The problem is, these are not kids who we hope may grow up one day to be President or CEOs of major companies. these ARE CEOs of major companies and they are being paid top salaries for top performance and we, the stock purchasing public, are paying top dollar for what should be SPECTACULAR performance, not beating 75% off last year by a nickel!
When I am being asked to buy IBM back at it’s all-time high or AMZN or BIDU or AM, PALM, NFLX, PCLN, URBN, UHS, CERN, CREE, GMCR, CY, SWM, TRLG, BKE, etc - then their performance better look like this:
Nothing against those particular companies, any individual company can be exceptional and beat the market but are the companies we’re buying really doing exceptional things or are have we just developed such ridiculously low expectations that we have been psychologically conditioned (and Wall Street firms employ armies of behavioral psychologists for a reason) to treat these stocks and the CEOs who run them like our children. If your child was the child in the above picture and I asked you for $20 to see here show - you might pay it. If it’s not your child though, would you even consider making an afternoon of it? No, of course not, you want to see the cool fire guy at the top of his game and that is what you should expect from companies trading at or near all-time highs - NO LESS!
I love President Obama but he was just given a Nobel Prize simply for not being President Bush. On Sept 17th, PALM announced that it lost 10 cents a share, not losing the 25 cents expected and gave lowered guidance for Q3. The non-adjusted loss for PALM was their 9th consecutive…
