I know you having tough time So here’s some fundamentals on S&P 500 as a therapy for your impatient Amygdala !
1) Earnings Upside
In Q4 of 2021 Analyst predicated earnings rise of 20.1% while companies beat the estimate
and actual result were 26.5% .putting such good numbers should be rewarded in 2022 .
2) Inflation is friend of revenue
Well in some case yes . During rising inflation stocks tend to be good hedges compare to bonds The reason is inflation let’s companies to raise prices and hence inflating the revenue.
During recent research by region banks , they noticed that the prices for Goods and price paid for Goods are all time high which means companies are able to raise prices smoothly and customers are ready to pay for it.
3) Supple chain disruption is easing.
There is no numbers to justify this but a simple matrix I saw were for Semi conductors delay weeks are reduced from 4 weeks to 3 .Good numbers from FedEx and other delivery firms complimented it as they reduced the package delivery time in last earning calls.
Though rising labor prices , supply chain disruption and higher oil and commodities price S&P 500 margin is hovering around 13.0% since start of the year.
Forward profit margin is also looks impressive and not dropping mainly due to efficient process and companies confidence to manage current disruption well example : Apple reported highest margin in last quarter result , Tesla manage to navigate chip shortage with adjusted software .
if we take all 11 sectors of S&P 500 and check there forward margin % , none of them will disappoint you .(Below data is Up to Date Feb 17-2022 )
|and Consumer Staples||7.6|
Last but not the least :
5) Going with flow :
ok. This one came out more of philosophical but if we side line Ukraine crisis for a while, it is quite clear. ( which i hope Mr. Putin is happy with eastern Ukraine for now )
Inflation is rising and Fed needs to raise interest rates.
During this period Energy mostly do well and growth stocks gets hurt due to valuation multiples.
Stocks with lots of air in their Profit and earnings tend to loosen up air when interest rates are rising along with inflation, but that could dip buying sooner or later because its new world which is ruled by mobile phones not buy pen.
So What all these “Wisdom” means.
Well my 2 cents are on waiting game here. I am picking up stocks which I like when I find it on good bargain. Not going all in , But waiting for Dust to settle.