The Weekly Update 5/17/2024

Long time readers of “The Weekly Update” know I am particularly fond of trends.  Trends tend to tone down the noise around single data points.  Below I have listed earnings for Corporate America, as measured by the S&P 500, from 2020 through the early estimates for 2025.  (Sourced from Yardeni Research)

     2020    $138 

     2021    $208   

     2022    $219   

     2023    $239

    2024    Estimate $251.20                                                                                                       

    2025    Estimate $277.56

Now close your eyes for a moment and feel what you were feeling about your investment plan between 2020 and NOW.  Remember how you felt as your news source scared you with all the details around topics like, Covid-19, global shut down, riots, inflation, war, recession (yes, the one that didn’t recess), interest rate hikes, gas prices, culture wars, etc., etc.

Now open your eyes and look at the earnings above once again.

I will again suggest the negative headlines are made up to get your eyeballs so the news can sell you “stuff”!  Most of what you hear is some person’s “opinion” of the future, which of course no one knows, so complete bologna!

At this point it would be difficult to argue that our current valuations for Corporate America are too high, when supported with the solid earnings listed and estimated above.

Focus for a moment on the 2025 estimated earnings above.  At that level, the S&P 500 is trading at about 18.81 times earnings.  Take out the BIG 7 tech giants and the remaining 493 companies trade at 13x earnings!

This is before the lights start turning on in the $110 billion in newly built U.S. factories.  That roll in starts about now!    

At The WSG we intend to continue adding investments we believe have value in our client families asset allocation.

I’m interested in your thoughts, comments, and observations.  Feel welcome to call, email, or stop by the office and say Hi.

Respectfully,

James O. Lunney, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional  

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Stock investing includes risks, including fluctuating prices and loss of principal.

Asset allocation does not ensure a profit or protect against a loss.  Value investments can perform differently from the market as a whole.  They can remain undervalued by the market for long periods of time.