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John Lounsbury
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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
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  • 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.

    Stocks: SPY
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  • dividend_growth
    , contributor
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    This chart shows the effect of globalization and the ever widening income inequality.
    15 Jan 2013, 05:51 PM Reply Like
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