Myers Capital Management

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Profit Update

May 19, 2020 by Paul Myers, Myers Capital Management

I have said many times that the main long term driver of the stock market is profits. But in the shorter term various types of news can move the markets significantly.

Let’s first look at the long term driver of the markets, company profits. For over a month, various companies have been reporting their first quarter earnings. With 454 companies from the S&P 500 having reported earnings (91.9% of market cap), JP Morgan’s current estimate for 1st quarter 2020 earnings is $20.23, with earnings per share growth declining 46.7% from the first quarter of 2019. Keep in mind that the economy grew through the first two months of the quarter! The halt in economic activity in March is the primary cause of the earnings slide, although oil prices, which were down 16% on average during the quarter, also contributed to earnings weakness.

Even though second quarter earnings are likely to be much worse, stocks have been trending up. Yesterday the S&P 500 was up 3.15% on positive news regarding initial human clinical trials of a COVID 19 vaccine and continued reports of parts of the country opening up. Obviously current good news has overshadowed the bad news about company profits.

As businesses open up and people begin to leave their homes, will this thrust the stock market even higher, or will a potential second wave of virus infections sober investors that the economic slowdown may not be so quick to go away and create a second market decline, as typically has occurred in past recessions? Only time will tell in this every so hard to predict recession.

Filed Under: Myers Cap Post

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The Myers Cap Post

  • A Gaze Into The Future
  • Positive News On Company Profits
  • Market Overvalued, But Stocks Are A Leading Indicator
  • Markets Are High… Should I Invest?
  • Unemployment Lowers to 6.3%
  • US Economic Growth Continues in January Despite COVID Woes
  • Is It Time To Take More Risk?
  • Economy Continues to Grow In the 4th Quarter
  • Strange Recession and Recovery
  • Profits Improving But Likely Not Caught Up
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Myers Capital Management (“RIA Firm”) is a registered investment adviser located in Abington. Myers Capital Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements Myers Capital Management ’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of Myers Capital Management ’s web site on the Internet should not be construed by any consumer and/or prospective client as Myers Capital Management ’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Any subsequent, direct communication by Myers Capital Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of Myers Capital Management , please contact the state securities regulators for those states in which Myers Capital Management maintains a registration filing. A copy of Myers Capital Management ’s current written disclosure statement discussing Myers Capital Management’s business operations, services, and fees is available at the SEC’s investment adviser public information website – www.adviserinfo.sec.gov or from Myers Capital Management upon written request. Myers Capital Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Myers Capital Management’s web site or incorporated herein, and takes no responsibility therefor. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.   This website and information are provided for guidance and information purposes only. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy. This website and information are not intended to provide investment, tax, or legal advice. Insurance products and services are offered and sold through Myers Capital Management and individually licensed and appointed insurance agents.   • Copyright Myers Capital Management
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