Stop Me If You’ve Heard This Before

Markets, and particularly equities, built in "great expectations" over a five-month rally that found global shares rising some 25% from the local lows. Those expectations, Morgan Stanley's Mike Wilson said Monday, "demand an earnings boom." It's becoming quite difficult to editorialize around the same skepticism and excuses week after painful week. It's not so much that I'm exhausted with it. Rather, I find myself discomfited by the increasingly glaring disparity between recycled bearish talkin

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6 thoughts on “Stop Me If You’ve Heard This Before

  1. Start with a lot of fiscal spending (in excess of collected taxes), add a few drops of lowered interest rates, and finish with a pinch of earnings improvement.
    Mix it all together and bake for the next 6- nine months and what do you get? An equity soufflé!

  2. The problem that strategists have is that they are required to have a black and white call over a relatively short time frame- it’s hard to be right all the time. I have been skeptical also, but as an investor only pulled back a marginal amount. I was wrong but did not really hurt clients. These calls are about probability distributions. Wilson’s distribution may have been spot on, but the market had different ideas. If you look back a little over 2 years, equity market performance has been better than bonds, but it has not shot out the lights either. Neil dutta has been hot, but I have no doubt he will be caught offsides too. It’s the nature of the game. And it does not diminish either Wilson or Dutta.

  3. Herein lies the worry with AI becoming a player everywhere, what happens to markets when various LLM’s start suggesting stock picks? People will buy what AI tells them to buy causing valuations of those selected securities to rise. FOMO kicks in for those paying attention and they add to the increased valuations. ML models will be built to watch the LLM model suggested buys and play off them as well, more increased valuations. Then a triggered sell off that tanks the security based on a combination of LLM and ML model executions. This could all happen in a matter of hours and/or minutes, fundamentals plainly do not matter in the current age of investing. What happens when the NYSE starts looking like a day in the cryptoverse?

  4. IDK. Mike Wilson says he believes in AI and the AI revolution.

    OK. So instead of looking at the index, what about focusing on the tech giants and the second tier tech companies (CRWD, SNOW, PLTR, ADBE, whatever you prefer)? How’s their projected EPS?

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