Picking a Bottom

S&P recently said that the S&P 500 will have a slight earnings loss for the fourth quarter of 2008. This is the first loss ever for the index. However, AIG’s gigantic $62 billion loss knocks out $5.13 on operating earnings, so the other 499 made a small gain.
I’ve seen a lot of folks throw out numbers for a bottom in the S&P. Nouriel Roubini, for example, sees earnings for the index coming in at $50 for 2009. Using a multiple of 12, he places a target of 600 for the S&P. I agree on the $50 a share for earnings, but I’m inclined to see a higher multiple simply because that level of earnings would (hopefully) mark a trough.

Posted by on March 10th, 2009 at 11:25 am


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