BEAR ARGUMENT #1: EQUITIES HAVE GONE TOO FAR, TOO FAST
2021 has been an amazing year for stocks, with the S&P 500 up approximately 20% for the year without so much as a 5% pullback. Additionally, it has made 52 new all-time highs so far. To put in context how rare this is, only 1964 and 1995 saw more than 50 new highs before August was over. In fact, the all-time record for new highs in one year is 77, set in 1995, and this year is on pace to come very close to that record.
BEAR ARGUMENT #2: STRONG EARNINGS HAVE JUST BEEN DUE TO EASY COMPS
The economy’s remarkable stimulus-aided recovery from the swift but severe pandemic recession of 2020 set the stage for a tremendous earnings surge that has been going on for a year now. And it is true that a good portion of that growth was due to the lockdowns in the year-ago quarter boosting the growth rate. But that isn't the whole story—not even close...