You may think you have an insight but if you are anything like me, you don’t really trust it. However, I do have resources that are very talented and articulate and make coherent arguments that most everyone can follow. To that end, here is a report from J. P. Morgan that you can download and read at your leisure.
Here is the overview from the minds of Joseph S. Tanious, CFA and Anthony M. Wile, authors of the report.
Overview
• After record-setting earnings in the first two quarters of 2013, the S&P 500 is on
track to hit another historic high in profits for 3Q13. If this occurs, the first three
quarters of this year will have been the most profitable ever in the 56-year history of the S&P 500.
• Future earnings growth through margin expansion seems unlikely, as an
improving labor market and higher interest rates will most likely squeeze
margins. However, stable revenue growth, share buybacks and the additional use
of debt financing should support modest earnings gains in the year ahead.
• Given average valuations, return expectations in U.S. equities should be tempered However strong corporate fundamentals and stock prices that are not tempered. However, fundamentals, yet overly expensive, signal that U.S. equities still have room to run.
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