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Relax About The Stock Market Already, Says Sonders The Outlook Is Good
Yahoo - Market Ticker ^ | Henry Blodgett

Posted on 07/28/2011 9:31:50 AM PDT by blam

Relax About The Stock Market Already, Says Sonders — The Outlook Is Good

By Henry Blodget
July 28,2011

In the past few days, investors have finally begun to worry that the debt-ceiling fight in Washington will lead to a market crash.

And some of them have begun rushing for the exits.

Longer-term, investors worry that the stock market has come so far in the past two years--doubling off the 2009 lows--and that the economy is so rickety, that stocks can't possibly be a good investment here.

The chief investment strategist at Charles Schwab, Liz Ann Sonders, says they can rest easy.

Sonders thinks the debt-ceiling fight will get resolved and then blow over. She also doesn't think we're going to have another recession. She thinks the economy will continue to grow at a respectable rate of about 3% in the back half of 2011 and through next year. She notes that earnings projections for 2012 call for another year of double-digit gains in earnings growth and that stocks are not expensive based on those projected earnings.

And what about today's profit margins, which are back at record highs? It has been growth in profit margins, not growth in revenues, that has driven earnings growth in the past two years. Can profit margins really go any higher? In the past, when corporate profit margins have hit levels like today's, they have eventually violently reverted to the mean, crushing earnings. Won't that happen again?

Sonders says that the 2012 earnings projections actually assume that margins will shrink a bit and that much of the earnings growth will come from revenue growth. She also thinks stocks are cheap enough relative to the projected earnings that there's some downside protection.

(Click to the site to see the video)

(Excerpt) Read more at finance.yahoo.com ...


TOPICS: News/Current Events
KEYWORDS: djia; economy; markets; stocks

1 posted on 07/28/2011 9:31:54 AM PDT by blam
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To: blam

There you go, up 52.

2 posted on 07/28/2011 9:33:15 AM PDT by blam
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To: blam

I don’t like the slope of that graph.


3 posted on 07/28/2011 9:34:38 AM PDT by RitchieAprile
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To: blam
I keep thinking about the amount of cash being stored in corporate vaults.

Eventually CEOs will start spending it to grow by acquisition lest the shareholders start demanding big dividends. That should make Wall Street very happy.

4 posted on 07/28/2011 9:35:21 AM PDT by Glenn (iamtheresistance.org)
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To: blam

They will sign a deal Monday night, approximately 11:45 pm.


5 posted on 07/28/2011 10:45:40 AM PDT by freespirited (Stupid people are ruining America. --Herman Cain)
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To: blam

Who worries about the damn stock market who can get in a panic if somebody like Warren Buffett grows a wart on his toe! They’ve been getting their panties in a wad every other day now for two and half years.


6 posted on 07/28/2011 10:48:52 AM PDT by RowdyFFC
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To: All
I love how these guys can point to a reason why "the market" acts one way or another. I'm not the least bit worried about the debt ceiling but I am semi-concerned about this weeks report on durable goods orders and the Rasmussen consumer index.

Mebbe I should change my name to "The Market" and then just can have a single authoritative source.

7 posted on 07/28/2011 10:50:09 AM PDT by Proud_texan (Scare people enough and they'll do anything.)
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To: blam

Have to save the market or all those retired federal employees will quit voting Democrat.


8 posted on 07/28/2011 11:31:45 AM PDT by blueunicorn6 ("A crack shot and a good dancer")
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