The Weekly Update 8/29/2025™
The Common Denominator!
For almost any company of Corporate America, the valuation of that company is based on how much money they earn. If my Kool-Aid Stand has profits of $1 and yours has $10, it is likely your Kool-Aid stand’s valuation is 10x mine!
Thus, the common denominator of a company’s value almost always comes back to earnings. With that as the backdrop, make special note of the red line and make note of the trend.
As I have noted here often, Corporate America is 10x smarter than the politicians inside the D.C. beltway. They just figure stuff out. Period! How can I be so sure? How about back-to-back-to-back quarters of +12% earnings growth for Corporate America. I’ve been around for four decades and don’t recall seeing this before.
Per the U.S. Federal Reserve, there is about $7.5 trillion still sitting in money markets looking for a spot where it could be invested for a better return. Rhymes with a “wall of money” …waiting. For what? I don’t know, as it is all right there in the two charts above.
That said, Mr. & Mrs. 401(K) remain scared to invest! Here is the latest bull (positive outlook) versus Bear (negative outlook) for the last month. Make special note of both the trend of the positive outlook going down and that nearly 70% of investors have a negative outlook for the next six months.
These three charts combined are all you need to know for the investment outlook into 2026.
✓ Corporate Earnings super positive
✓ Corporate Earnings expanding 2x Revenues - Amazing
✓ A Wall of money ready to invest – rhymes with Fear of Missing Out (FOMO)
✓ Petrified stuck in the mud investors allow us time to position for the FOMO surge
I did not say market valuations go straight up, and I did not say without volatility, yet the data flow suggests the good old USA has a very bright outlook. Think “Five Year Money” (Read it Here).
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
*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.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Investing involves risk. Loss, including loss of principal, may occur. No strategy assures success or protects against loss. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Copyright © 2025. The Wealth Strategies Group. All rights reserved.