Here we see Corporate Profits (% of GDP), with the Dow over the past 35 years. Corporate profits are at an all time U.S. high. However, in order to get out of an historically massively over-valued market of this type, there needs to be enough tools left on the sidelines to make exit possible. Unfortunately, it's hard to convince people that profits will keep rising, when they are already falling from record levels.
Profit data from: Fred:
In 2008 we see above how quickly profits and stocks drop when there are no more tools left to con and profits "revert" back to pre-bailout reality.
"(Bloomberg) -- U.S. chief executive officers are more pessimistic about corporate earnings than any time since the financial crisis, according to research from Bespoke Investment Group LLC."
"The percentage of companies cutting profit forecasts during this earnings season has outpaced those with upward revisions by 8.6 percentage points, the widest margin in six years."
"Analysts now expect per-share earnings from S&P 500 companies to decline 2.1 percent in the first quarter"
“It looks like either companies were caught way off guard or they are throwing in the towel on 2015”
MW: Jan. 14, 2015
Investors Face the Worst Time Ever To Buy Stocks
Not only are profit margins at an all time high (above), but Price/Earnings multiples are also at an all time high (below).
There will be no buyers under the most overvalued market in U.S. history, amid collapsing profits. The greatest tools are ALL IN.
