According to Mitchell Clark, contributor to Profit Confidential, the stock market is ticking higher in the face of continued weak economic news, and it’s mostly due to the good corporate profits being announced. Clark believes that for the most part, good corporate profits are being seen so far because expectations were already reduced.
In the article “Corporate Profits Meeting Expectations— Stock Market Action Positive,” Clark says some companies are slightly reducing their outlooks for the rest of this year, but the declining visibility is modest.
“Corporations are being extremely conservative with their forecasts and rightly so. It makes it easier not to disappoint,” Clark points out.
The Profit Confidential contributor believes that corporate profits are mostly expected to be flat compared to last year; “This makes dividend income all the more important,” he observes.
Clark states that if you look at a number of blue-chip, dividend paying stocks in this stock market, you’ll notice that many of them are actually trading right at their 52-week highs.
“While expectations for corporate profits continue to be very modest, institutional investors keep buying the dividends,” reports Clark. “It’s the only way to beat the inflation rate and the probability that the stock market will return little, if any, capital gains going forward.”
At current levels, Clark believes that the stock market is saying that 2012 corporate profits won’t disappoint in the bottom half; he argues that the stock market is holding up remarkably well, taking into consideration the reduced visibility for the remainder of the year and further geopolitical risk.
“Combined with dividends, a 10% return on the S&P 500 Index isn’t unreasonable this year,” Concludes Clark.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
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Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.