Published June 19th, 2011
Dallas Morning News
By: Ed Butowsky
Do not allow stock market pullbacks to frighten you.
Corrections within bull markets are inevitable. With high unemployment and the economy anemic, I believe there is little support for stocks going higher in the short run.
But the overall stock market is currently 6 percent undervalued based on expected earnings. Those earnings are just that – expected. Stocks move six to nine months ahead of earnings, therefore they are currently priced based on companies achieving those forecast earnings.
If those earnings expectations are not met, stock prices will drop because they have already moved up in anticipation of those numbers. For countless reasons, including high energy prices, low wages and sluggish economic activity, I am comfortable in saying those numbers won’t be met and stock prices will retreat over the next quarter or two.
Investors have little choice but to accept this premise and stay invested. Market timers rarely know when to get out or get back in. Stay fully invested and be aware that this retreat is temporary.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry. Ed is also a frequent guest on other networks such as CNN, NBC, ABC, Fox News, Fox Business, and Bloomberg to name a few.
Check out some of our other articles:
- US Stocks Drop For Sixth Straight Week
- Interest Rate Sensitive Bonds Could Be A Problem
- Homeowner Horror
- Stagflation May Be On The Way
Tags: Earnings, forecast, investment, stock market, stocks, unemployment, wages
