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Day 65: Earnings Not Trump

The Mother's Little Helper portfolio was up today +(2.31%) for a GAIN of +14,422.48 . Overall GAIN: +$34,157.05 (+5.66%). 86 stocks in the black, 35 still in the red.

The rally in the market is about data, good data, not Trump. Trump provides the support that keeps sentiment high and that's good for markets. But the fuel behind this rally has to do with earnings. Last year all the financial news centered on "The Earnings Recession" and The Fed's interest rate decisions. The earnings recession is over, for now, and President Trump had nothing to do with it.

Earnings Scorecard according to FactSet:

  • 92% of the companies in the S&P 500 reporting actual results for Q4 2016

  • 66% of S&P 500 companies have beat the mean EPS estimate

  • 52% of S&P 500 companies have beat the mean sales estimate

  • For Q4 2016, the blended earnings growth rate for the S&P 500 is 4.9%.

  • Q4 will mark the first time the index has seen year-over-year growth in earnings for two consecutive quarters since Q4 2014 and Q1 2015

  • On December 31, the estimated earnings growth rate for Q4 2016 was 3.1%

  • Eight of the eleven sectors have higher growth rates today (compared to December 31) due to upside earnings surprises and upward revisions to earnings estimates, led by the Real Estate sector

Too Late?

I get emails asking me if it's too late to get into the market, as though the market is a roller coaster and we all have to wait for it to enter the station to get on. Every day is a good day to be invested in the stock market. There remains no better place to earn returns on your money. What's more important is that there remains no better way to diversify you own skills. A VP of Marketing can't diversify her skills into carpentry because a housing boom presents an opportunity. The stock market enables anyone to diversify their assets into any sector without the need to develop new skills or change career fields.

Prognosticating about where the DOW will close and how high the S&P 500 will get by years end is a fun parlor game, but should not determine when or if you invest in the market. Create a plan, invest regularly just as you save. Making money in the market requires time and a selection of good companies, index funds, gold and patience.

Stay Invested

Clay Baker

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