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Fishing for Answers

It certainly was a couple wild days for the market while I was fishing Lake Okeechobee down in Florida. Gladly I was able to stay abreast of these important matters while also bagging a boatful of big bass.

The main culprit for the drop on Monday was a Goldman Sachs report outlining how they believe the market is overvalued by most measures. There is some merit to their points EXCEPT for the most important element. That being the value of stocks versus other investment alternatives... in particular bonds.

Their study went back 35 years. Meaning they started when the 10 year bond rate was at 9.1%. From there it went up to a peak in 1981 and has been on a downward course ever since. Meaning that in modern times, bond rates have never been this low and unattractive. Or real estate so lackluster. Or precious metals a non-factor.

I am NOT saying that stocks are cheap. I would say they are fairly valued pushing towards fully valued given the current environment. And yes, if that environment changes, then so too does my stock market outlook. Namely if 10 year Treasury bond rates climb to around 3.5% or higher, then the price of stocks will come under pressure.

For now the bull market is in place and the rise back towards the highs the last two days tells you that most investors are in agreement with that notion. However, it will be tougher sledding this year.

Gladly we know how to make money in these times by keeping a firm focus on earnings estimate revisions. That is especially true during earnings season as our earnings whisper system coupled with the Zacks Rank gives us a big edge over the average investor. Jared Levy covers this timely strategy in his new article:

QE & Earnings Warnings: Time to Buy?

Plus Other Top Commentaries:

•  Black Gold + Open Blue = Mint Green

•  Biotech Stock Roundup

Best,

Steve Reitmeister (aka Reity...pronounced "Righty")

Executive Vice President

Zacks Investment Research

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Bull & Bear of the Day

Zacks Rank #1

Artisan Partners (APAM)

This asset manager has seen sequential growth in revenue in each of the 3 quarters they have reported.

 

Zacks Rank #5

Ford (F)

Despite a great year of car sales, analysts are driving estimates lower.


Stock Picking Strategies

Earnings Yield Screen: 5 Winning Stocks  ››

4 Shareholder-Friendly Cash Machines  ››

Market's View of Jobs Report  ››


Funds Commentary

Zacks #1 Ranked Energy Mutual Funds  ››

Robust Car Sales Bring Auto ETF in Focus  ››

MLP ETFs: Still Good for Income Investors?  ››


Options Strategies

Getting Ready for Earnings Season with Options  ››


Video Reports

This Week's Growth & Income Stocks: (LAZ) (NHI)

Growth & Income Stock Strategist, Todd Bunton, highlights Lazard (LAZ) and National Health Investors (NHI) on January 14, 2014.

Roundtable Top Picks for the Week of Jan. 13th

Ideas for ETFs, Insurance and Wireless. Opportunities covered include iShares US Broker Dealers ETF (IAI), Gogo Inc. (GOGO) and Maiden Holdings (MHLD).

What is Your Stock's Earnings Yield?

Kevin Matras talks about a stock's Earnings Yield and how to use it. Highlighted stocks include ACT, AHL, ANW, TRN and URI.

Earnings HQ

Today's Noteworthy Earnings Before the Bell:   ››  CTSMGSUNHBLK

Today's Noteworthy Earnings After the Bell:   ››  INTCAXPCOFSLMSWKS

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Visit the Zacks Earnings Calendar

Recent Earnings Winners

Company Symbol Reported Surprise %Price Chg
TRIMEDYNE INC TMED Jan 15 +0.02% +9.99%
UNION BANKSHARES INC UNB Jan 15 +0.34% +4.20%
EDUCATIONAL DEVELOPMENT EDUC Jan 15 +0.14% +2.88%
PLEXUS CP PLXS Jan 15 +0.61% +2.49%
BANK OF AMERICA CORPORATION BAC Jan 15 +0.29% +2.27%

See All »

Best Earnings ESP Stocks  

Company Symbol Consensus
Est.
Most
Accurate Est.
Reports Zacks Rank ESP
WESTERN DIGITAL WDC 2.08 2.09 Jan 22 1 +0.48
BALLY TECH INC BYI 0.96 0.99 Jan 30 1 +3.13
CIRRUS LOGIC CRUS 0.68 0.71 Jan 28 1 +4.41
SOUTHWEST AIR LUV 0.28 0.30 Jan 23 1 +7.14
WYNN RESRTS LTD WYNN 1.70 1.89 Jan 30 1 +11.18
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