A Developing Stock Market Trend Continues To Make The Bears Look Like Fools

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		Home Tech Finance Markets Politics Strategy Entertainment Advertising Retail Sports Life Monday, March 11, 2013 A Developing Stock Market Trend Continues To Make The Bears Look Like Fools The S&P 500 is within a few points of an all-time high. However, earnings growth estimates and forecasts continue to come down. "The estimated earnings growth rate for Q1 2013 is -0.6%," wrote FactSet's John Butters in a note on Friday.  "On December 31,the earnings growth rate for Q1 2013 was 2.2%. "Since the start of the first quarter (December 31), analysts have also reduced earnings growth expectations for Q2 2013 (to 4.9% from 6.3%), Q3 2013 (to 10.1% from 10.4%), and Q4 2013 (to 15.7% from 17.3%)." Earnings growth is the most important driver of stock market returns.  So, it can be a bit jarring to see stocks rise as earnings expectations fall. The technical term for this phenomenon is "multiples expansion" as the price-to-earnings ratio is increasing.  When multiples are expanding, stocks are getting more expensive. Some stock market bulls argue that valuations should justifiably be higher. But the bears will warn that eventually, these cracks in earnings expectations will catch up to the market and manifest in a sell-off. For now, the bears who have been banking on earnings expectations falling are looking pretty stupid. Here's the chart from Factset: Read » Also On Money Game Today: Yum! Brands Is Getting Crushed In China, Same-Store Sales Plunge 20% DOW CLOSES AT BRAND NEW ALL-TIME RECORD HIGH: Here's What You Need To Know Advertisement CHART OF THE DAY: THE SCARIEST JOBS CHART EVER CHART OF THE DAY: Investors Are Getting Really Pessimistic CHART OF THE DAY: A Stock Market Trend Has Developed That Coincided With The Last 3 Recessions Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: dwyld.kwu.jobhuntportal11@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

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