9-21-26 What Happens When Earnings Estimates Fall Short

Earnings expectations can drive stock prices higher, but what happens when corporate profits fail to meet those expectations?

Lance Roberts examines earnings mean reversion, why Wall Street estimates can become overly optimistic, and what falling short of projected earnings could mean for stock valuations and market returns; what is the relationship between earnings growth and economic growth, how expectations become embedded in stock prices, and why elevated valuations can make earnings disappointments more consequential. Importantly, what should investors watch as earnings estimates change, and how can portfolio risk be managed when expectations and fundamentals begin to diverge?

0:00 - INTRO 0:59 - Rebalancing Coming; The History of Pensions (now over-funded) 3:51 - Friday's Options Expiry: Volatile Markets 4:37 - Markets Continue to do what they've been doing - Nothing 7:24 - Be Cautious with Allocations 8:03 - Volatility Remains Compressed 10:29 - Website & Radio History 13:50 - Goldman Earnings Estimates - What it doesn't show 17:28 - Why Most Narratives Never Matter - Earnings Don't Always Go Up 21:02 - (Chart) S&P Earnings vs Long Term Trend 22:55 - (Chart) S&P 500 Profit Margins Have Re-Based Higher 23:57 - The Apple iPhone Example 27:40 - The Earnings Boom Runs on One Budget (chart) 29:35 - (Chart) The Consensus Already Forecasts a 2027 Cliff 30:55 - A Narrative Worth Paying Attention to: What if spending tapers off? 32:45 - K-Shaped Economy tease 34:07 - Fed Rate Hike Recap - Where the Fed Rate Hike Reaches... 38:52 - The Fed's Dot Plot Signal 41:51 - Expectations vs Reality & Fed Irony (chart) 42:48 - Who Performs Best When Fed Rates Rise (chart) 43:37 - Portfolio Action Plan

Hosted by RIA Advisors' Chief Investment Strategist, Lance Roberts, CIO Produced by Brent Clanton, Executive Producer ------- Do you enjoy our content? Rate us on Google: https://bit.ly/4b9JtEo ------- Watch Today's "Before the Bell" report, "Market Pressure Is Building," https://youtu.be/PBwgI2MdnFM ------- Watch Today's Full Video on our YouTube Channel: https://youtube.com/live/ewgHX5U7dEg -------- Watch our previous show, "Will Your Money Last as Long as You Do?" https://youtube.com/live/360YB_NdPwA ------- Articles Mentioned in Today's Show: "Earnings Mean Reversion: When Estimates Snap Back" https://realinvestmentadvice.com/resources/blog/earnings-mean-reversion-when-estimates-snap-back-2/ "The Fed Rate Hike Won’t Fix The Inflation It Targets" https://realinvestmentadvice.com/resources/blog/the-fed-rate-hike-wont-fix-the-inflation-it-targets/ "K-Shaped Economy: Reality Or Media-Driven Perception" https://realinvestmentadvice.com/resources/blog/k-shaped-economy-reality-or-media-driven-perception/ --- Get more info & commentary: https://realinvestmentadvice.com/insights/real-investment-daily/ ------- Visit our Site: https://www.realinvestmentadvice.com Contact Us: 1-855-RIA-PLAN --- Subscribe to SimpleVisor : https://www.simplevisor.com/register-new --- Connect with us on social: https://twitter.com/RealInvAdvice https://twitter.com/LanceRoberts https://www.facebook.com/RealInvestmentAdvice/ https://www.linkedin.com/in/realinvestmentadvice/

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