📈 Wall Street earnings estimates are wrong - the E resets, not just the multiple

“what they actually re-underwrote was that actually it's not that the price to earnings was cheap. It's that the E in PE was just wrong. ... I think Wall Street's wrong. And I think that earnings are going to go down this year and will definitely go down in 23 ... I think what probably happens is the entire world of equities needs to get repriced at a lower price.”

“I think what people would say is maybe they're going to lower their costs. And so with layoffs and lowering salaries and lowering spend on advertising, you know, the E could go up.”

“And I'm going to still maintain that the E is wrong. The earnings are wrong for most of these companies. So why? Well, one is that when these companies start to report their quarterly earnings starting in the next few days, the year-over-year comparison is going to be to the numbers that they posted in Q2 of 2021, which by all accounts was a blowout number.”

“Currently, and this is for the S&P 500, we're currently at 20 or so, and we have twice in our lifetime kind of hit that 13, 14, 15 level, so we could have a 25% correction from here in the stock market.”

“The root awakening is going to be for all these people who made all these bets, assuming that it's permanent. And specifically, I mean, you know, especially around real estate and work from home and all of this stuff, benefits, and it's all going to change now. And the reason I say that is the combination of reversion to the mean will impact a company's bottom line.”

“Unemployment will go back up. Inflation will be sticky. Real earnings will shrink. Consumption will ebb. And earnings will not be that great.”

“Well, those four companies are now being identified for what they may be, which in capitalism is called over earning.”

“On earnings, there's kind of a conventional wisdom emerging from many folks that $3,200 at the bottom or maybe $2,700 at the bottom, that we're going to go from $225 in S&P earnings back to $200. That seems to me to be, you know, again, a lot of people making that bet. I don't see any evidence in Q3 earnings.”

“because if this stuff could not bring the market down, it's hard to see something other than an exogenous event, probably some Russia-Ukraine event, really having a negative impact. So to me, I'm kind of like, I don't know, it seems like pretty bullish for me.”

“But I think the point here is that what you're seeing is the whole SaaS industry is really slowing down here. In the first half of the year, you saw SaaS valuations correct. Now we're actually seeing SaaS top line correct.”

“It's not getting better. I mean, the stock market today should be a wake up call. I mean, this is one of the worst days in the market the whole year.”

“once we all realize that these earnings are fake and you reset down 15%, that's where you get to the mid-3000 in the S&P 500”