“Not that there aren’t buys here, but this rosy scenario, where all you have to do is wait six months and we’re back off to the races, is a little premature,” says Alan Lancz, who runs his own investment advisory in Toledo, Ohio. “I’m hoping I’m wrong and everybody else is right.”
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As that filters through to the markets in the form of earnings estimate cuts, it could hurt the market. Generally, investors are already expecting worse-than-expected earnings in 2009 than is currently forecast by bottom-up analyst estimates, but earnings could fall short of even what is thought to be “priced in the market.”
“When companies universally cut their 2009 outlook and say they have no idea when conditions are going to improve, that’s going to shake new-found convictions in the six-months-from-now theory,” writes Kevin Flynn of Avalon Asset Management. “Yes, we had all the bad news priced in – at 750 on the S&P 500 index. At 900, it isn’t priced in. By all means trade this rally, but don’t fall for it.”
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“Whenever you get a consensus opinion — just as in summer 2007, when everyone said subprime was such a small factor of GDP — it kind of concerns me,” Mr. Lancz says.
http://blogs.wsj.com/marketbeat/2008/12/15/the-six-months-from-now-fallacy/
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