Animal Spirits Podcast

Did the Market Just Top? (EP. 434)

182 snips
Oct 15, 2025
The hosts dive into the challenge of predicting market tops and why earnings play a crucial role in this elusive game. They unravel recent market corrections and explore surprising data showing increased stock ownership among low-income Americans. The discussion shifts to the soaring gold prices, driven by central banks and geopolitical tensions. Plus, they tackle the cash-on-the-sidelines myth, emerging trends in the airline industry, and the economic footprint of private companies. It's a lively analysis of current market dynamics!
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INSIGHT

Earnings, Not Valuation, Trigger Bear Markets

  • Forward P/E alone doesn’t predict market tops; earnings revisions drive real risk.
  • Bear markets occur when expected earnings fall well below forecasts, not just high multiples.
INSIGHT

Prices And Earnings Top Nearly Together

  • History shows prices and aggregate earnings often top within days of each other.
  • You typically must wait for earnings to roll over before declaring a sustainable market top.
ADVICE

Treat Short Corrections As Healthy

  • Expect normal pullbacks; a 7% correction would be healthy after long calm stretches.
  • Don't treat a single down day as a decisive top; use it to reassess risk, not panic.
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