A Tale of Two Markets: Which to Believe?

Dawn Bennett discusses stock marketPundits have a lot of words they like to use to describe the U.S. stock market, but if there’s one that most accurately describes the current market, it’s “misleading.” This may come as a surprise to investors and everyday folks who check in with closing bell reports or tune into news talk shows, which more often than not, cast a glow around the stock market’s continued growth. Though the market continues to grow, as financial expert Dawn Bennett points out, there are a number of facts that indicate this growth is wholly misleading. These include:

  • The S&P Reported Earnings are Falling

4th Quarter earnings in 2014 for the S&P fell a sharp 14 percent for year-over-year figures, a clear reflection of the market’s steep losses, even as it climbs to historic highs. It’s also been reported that the S&P will go on to lose another 5 percent in earnings for the first quarter of 2015.

  • The Dow Jones Industrial is Decreasing

At this same time, reports are predicting that companies in the Dow Jones Industrial Average will also experience significant decreases in earnings; for the first quarter, analysts predict the Down Jones will fall 15.9 percent, followed by a 9.5 and 5.9 percent drop in the 2nd and 3rd quarters respectively.

  • The Dollar is Rising

While the dollar’s ascension may appear to be a good sign, it’s actually a clear indication that the dollar is “overbought”—valued at more than it’s actually worth. The dollar has risen in value 25 percent within the last year, a growth that hasn’t occurred at this pace in over 30 years.

  • Portfolios Aren’t Rising

Despite the fact that stock markets are trading at their highest levels ever, individual investors and money managers aren’t making significant gains, as would be expected. In fact, the Dow Jones Index has increased just 1.71 percent this year to date, which can barely be classified as a gain when trading and management expenses are accounted for.

Thus, there are two drastically different narratives about the U.S. economy at hand; the more widely-publicized narrative is, of course, that the stock market is a true indication of the health of the economy, while the more accurate narrative, supported by a host of factual reports and macro data, reveals that the economy is in worse shape than we’d like to believe.

 

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com