Seeking Alpha

John Lounsbury's  Instablog

John Lounsbury
Send Message
John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
My company:
John B Lounsbury CFP
My blog:
Global Economic Intersection
  • Ominous Earnings Graph 1 comment
    Jan 15, 2013 5:01 PM | about stocks: SPY

    John Hussman has been rather bearish for the past 1-2 years, and has been getting more so lately. The following graphic from the 5 Min. Forecast presents a 65-year data pattern that has an ominous implication for earnings. If the previous pattern is repeated again earnings will suffer a contraction of at least 20-30% over the next four years.

    The fallout for stock prices could be devastating if the pattern plays out.

    And what if the subsequent peak (red) exceeds the current peak (blue) as it has in all nine previous cases shown on the graph? The four-year annual profit decline could exceed 20%, which compounded would accumulate to more than 100% loss of profit.

    The last time we went into that area (4Q/2008), we went through a 58% decline in the S&P 500 index from the October 11, 2007 high (1,576.09) to the March 6, 2009 low (666.79).

    Disclosure: I am long SPY.

    Themes: bear market, earnings collapse Stocks: SPY
Back To John Lounsbury's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • This chart shows the effect of globalization and the ever widening income inequality.
    15 Jan 2013, 05:51 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.