Stock Bulls Bet It All on Earnings Guesses With Troubled Record
- S&P 500 bakes in profits analysts don’t see coming before 2023
- History shows faith in events that far out is often misguided
Photographer: Sukanya Sitthikongsak/Moment/Getty Images
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You’re never sure what earnings seasons will bring. Hence their volatility. But one thing is certain about the first-quarter results about to be disclosed. They couldn’t matter less to the market’s current valuations.
And while it’s a Wall Street cliche that “the guidance is what matters,” that view is being taken to absurd extents right now, when the S&P 500 is pricing in profits that virtually cannot materialize in two years. That’s a level of faith in the future that history gives little basis for justifying.