Worried About the Government Shutdown?

While the shutdown of the government is currently in the news, in a few days we will start to see an outpouring of corporate earnings announcements.

While corporate profits are still growing, they are doing so at a lackluster pace, while revenue growth has been even slower still. That means that many companies still are relying on cost-cutting to generate earnings growth.

That’s why, ultimately, it’s the outlook for third-quarter earnings that you should be worried about – and indeed, a reason to be a little more anxious, if not downright fearful, about what October and the remainder of the calendar year has in store for us. We’re sitting atop a stock market gain of nearly 18%. All things being equal, at this level and at these valuations – the S & P 500 is now trading at nearly 15 times next year’s earnings – the risk of a selloff is greater than the odds of another big rally. 

Even if Congressional policymakers once again manage to pull off a last-minute solution to the immediate problem, there are reasons to be wary about the market at its current valuations, and to view any relief with wariness.

Make sure you have an exit strategy in place – ask us about our SHM Financial Group Financial Stress Test (1-800-MONEY-SHM) and continue to watch us every Monday at 7:30 pm on WMCN TV.

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The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional adviser. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purpose or sale of any security.