It is impossible to know when something will matter, but I agree with Peter Cecchini, founder and CEO of AlphaOmega Advisors, who says that stocks cannot go ‘to the moon’ forever.
“Some of the earnings estimates I’m seeing, as you said, the consensus is just under $ 170, will require multiples that just don’t make a lot of sense to me in the context of the fact that the rates may not go lower. So, if we’re looking for multiple expansion to continue driving the rally, I don’t think we’re going to make it because the Fed’s effectiveness is limited, right? It has firepower, no one is saying that the Fed has no ammunition. He can print money and buy Treasury bills for as long as he wants. But at the end of the day, when you’re at zero, the stimulating impact is muted … I think it’s a big piece that people are missing out on. We are not just back, you know, to this “moon” scenario for gains. At the very least, we are back in a situation where cash flows remain challenging and, by the way, debt levels have exploded.
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