Crew Capital Management Thoughts on Investment

Welcome to the Crew Capital Management Thoughts on Investment blog. At Crew Capital, investment education is key to how we work with our clients. We hope our conversation and analysis entice you to think further on your investment strategies and planning. For further discussion, please contact us at rjung@crewcapital.com

Thank you!
Robert F. Jung, CFA CPA*

*CPA inactve

Friday, September 5, 2008

V-Shaped Recovery for Earnings in 2009?

As we have said repeatedly over the past year or so, earnings expectations are too high among both stock analysts and market strategists — but especially among analysts. Analysts in general are notoriously slow to adjust expectations at inflection points in the business cycle. Since stocks are valued based in part on earnings forecasts, we have turned our attention to analyst expectations for 2009. What we found is that double-digit earnings growth is expected in every sector. What jumps out most is the 130% rebound expected in Financial earnings. Granted, Financial earnings are expected to drop by more than 50% in 2008. Still, we believe that forecasts for the group remain too optimistic. Earnings from Consumer Discretionary stocks are expected to jump 30% next year. Expected growth rates for 2009 have grown as estimates for 2008 have been slashed. But in our view, stocks will struggle to rally meaningfully until expectations for 2009 come down as well.

Source: Argus Research Market Watch, September 4, 2008
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