Wall Street Breakfast
Looking at VIX and earnings growth with Mott Capital Management
Dec 17, 2023
Michael Kramer, Executive of Mott Capital Management, discusses the market's anticipation for 2024 earnings growth and implied volatility levels. He explores finding undervalued pockets in the market. They highlight concerns about achieving expected earnings growth due to factors such as decreasing inflation rates. The chapter emphasizes the need for a long-term mindset in investing and the importance of resilience.
09:53
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Quick takeaways
- The market's anticipation of earnings growth for 2024 is high, but factors such as falling inflation rates and decreased pricing power may make it unlikely to achieve.
- Investors should look for undervalued sectors like biotech, financials, utilities, and consumer discretionary, and focus on long-term wealth generation rather than short-term day trading.
Deep dives
Concerns about earnings growth and inflation
The podcast episode discusses concerns about the market's anticipation of earnings growth and the impact of inflation. The speaker points out that while earnings are expected to grow by 10% next year, this seems unlikely due to factors such as falling inflation rates and companies losing pricing power. The speaker predicts that margins will need to contract and that fourth-quarter earnings growth rates have already shown signs of slowing down. With an economy expected to slow down and a GDP growth rate declining, the S&P 500 trading at a high multiple for a sub 10% growth rate may be challenging to maintain.
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