$DOW JONES $S&P 500
if you're new to stock market- this note is for you:
it may not sound intuitive to a lot of new investors especially retail segment chasing FOMO rather than doing homework, but stocks have really disconnected from earnings estimates. Historical correlation betweeen S&P 500 & forward earnings estimates turned negative to approximately -0.90 since March 23rd, 2020.
Why is this a big deal?
Unprecedented policy intervention propped up market is acting like this is a start of a new bull market..
is it possible that we are in new bull ?? well, yes sure, but.. it would be a 1st time in history ever that we move to new bull market without running a course of recession and retesting of selloff lows.. it never happened in history. NEVER.
Can this time be different?? Except for CNBC talking heads and politically motivated WH spin doctors none of the big pro guys are buying into this.
once again - I'm not telling you not to buy. I'm only telling you do some basic homework besides reading nonsense comments posted by Webull's morons.. the catch is to buy ONLY strong balance sheet companies. Stuff which will survive a possible retest of March lows. I don't want to tell you what to buy so you don't think I have agenda.. I simply feel sorry for people, some of which just lost jobs and now may be talked into losing whatever savings they still have left. Stock market knows no friends..
I know it doesn't look like it's possible for a retest of March lows, but we witnessed exactly same market behavior throughout 2007-2009 and in previous recessions.. and the same people on tv were selling us same nonsense..
simply AVOID loading up on insolvent value traps only because you can buy those at 50-70% discount from all time highs. There's a reason why a given stock sold off by 70-80% from ATH. Would you buy a car with damaged engine only because someone offers it at 85% discount??
exactly same concept applies to stocks.. some of those companies are already insolvent. They must go bankrupt eventually, and only reason they still did not is because FED gave them loans to keep serving previous debt issues.. this is not a solution. This is crisis management.. we're in a political cycle and it's not politically expedient to allow massive uncontrolled bankruptcies..
a single most important rule of investing is not to lose what you're investing. Add less and collect. don't chase FOMO.. at the end, uncontrolled greed may prove very expensive to you and your families..
I hope this helps
Disclaimer: The comments, opinions and analysis expressed herein are for informational and educational purposes only and shoulk not be considered as individual investment advice or recommendations. Webull is not responsible or liable in any way for comments posted by pur users.