“The good news (for now at least) is that analysts are expecting a profit rebound in the fourth quarter and beyond. Forecasts are for earnings to increase 10% in the fourth quarter from the same period a year ago, and that earnings will be 11% higher in 2013 than in 2012.
What’s more, valuations (despite all the major indexes being at multi-year highs) are not completely unreasonable. The S&P 500 is currently trading at 13 times earnings estimates for the next 12 months.
Still, would it qualify as a monumental surprise if these profit projections wind up being too rosy? Analysts are often overly optimistic. And it just seems natural for stocks to take a breather right now when you consider all the macro risks.”
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