Biden win could cost stocks $20 per share, so another market collapse

[Scott Downey]

Lou Dobbs Tells RNC Chairwoman Ronna McDaniel She Should Thank Goldman Sachs for Warning a Biden Win Would Cost Investors $20 Per Share

Lou began the interview noting that Goldman Sachs said that if Joe Biden wins the election, US stocks will decrease by $20 per share on average. This was reported earlier:

Goldman Sachs warned the Biden tax plan would slash its S&P 500 earnings estimate for 2021 to $150, a cut of about $20 per share.

This prediction makes sense as Biden would raise taxes and kill the economy.

 

[InTheLight]

Lou Dobbs Tells RNC Chairwoman Ronna McDaniel She Should Thank Goldman Sachs for Warning a Biden Win Would Cost Investors $20 Per Share

Lou began the interview noting that Goldman Sachs said that if Joe Biden wins the election, US stocks will decrease by $20 per share on average. This was reported earlier:

Goldman Sachs warned the Biden tax plan would slash its S&P 500 earnings estimate for 2021 to $150, a cut of about $20 per share.

This prediction makes sense as Biden would raise taxes and kill the economy.

Sure, just like Obama raised taxes and killed the economy. Remember, the Democrats controlled all three branches of government in 2009-2010. Obama even ran on repealing the Bush tax cuts. Once he got in office, during the midst of the Great Recession, he didn't have the guts to raise taxes. In fact, in 2010 Obama signed off on a bill to extend the Bush tax cuts. Again, on New Years Eve 2012, Obama signed a partial extension on the Bush tax cuts. Obama even cut FICA taxes during the Great Depression. He ran again in 2012 on raising taxes and the best he could do was to restore the highest tax rate to 39.6%.

So, no, Biden won't raise taxes, at least not as long as we are in the economic mess we are in currently. I will even stipulate that he wants to raise taxes but a bill raising taxes will never clear Congress.

 

[KenH]

US stocks will decrease by $20 per share on average

The S&P 500 earnings estimate by Goldman Sachs is a decrease of $20 in earnings per share(EPS).

However, JPMorgan Chase estimates, "“The consensus view is that a Democrat victory in November will be a negative for equities. However, we see this outcome as neutral to slightly positive,” JPMorgan strategists led by Dubravko Lakos-Bujas wrote in a note to clients Monday."

 

[Scott Downey]

The S&P 500 earnings estimate by Goldman Sachs is a decrease of $20 in earnings per share(EPS).

However, JPMorgan Chase estimates, "“The consensus view is that a Democrat victory in November will be a negative for equities. However, we see this outcome as neutral to slightly positive,” JPMorgan strategists led by Dubravko Lakos-Bujas wrote in a note to clients Monday."

I just quoted word for word the article, like copy and pasting.
Stocks will decrease on average $20 per share is what it meant to me.

"Goldman Sachs warned the Biden tax plan would slash its S&P 500 earnings estimate for 2021 to $150, a cut of about $20 per share."

That is not earnings per share. If the average price is 150 per share, after a Biden election, the election the average share price will be 130 per share. The average share price of the S+P companies is 150 dollars per share. Which means this is forecasting the price you can buy or sell 1 share of S+P stock as an average. Maybe 20% drop in the market is being forecast by them.

 

[KenH]

That is not earnings per share.

Yes, it is. The quote you shared says, "would slash its S&P 500 earnings estimate".

 

[Scott Downey]

Yes, it is. The quote you shared says, "would slash its S&P 500 earnings estimate".

Hah, no its not...how could that be true.
NO company is earning $150 per share that is a common stock.
Example look at Microsoft, at 6$ per share and they are very profitable and succesful company.
What your suggesting is the average S&P stocks is many fold higher earnings than MSFT?
Microsoft EPS - Earnings per Share 2006-2020 | MSFT

Microsoft EPS for the twelve months ending March 31, 2020 was $5.99, a 32.52% increase year-over-year.

 

[InTheLight]

[,US stocks will decrease by $20 per share on average. [/URL]:

Goldman Sachs warned the Biden tax plan would slash its S&P 500 earnings estimate for 2021 to $150, a cut of about $20 per share.

This prediction makes sense as Biden would raise taxes and kill the economy.

Prediction makes no sense because stock prices vary greatly. It's stupid to use a dollar per share statistic to describe how much the market might drop.

Furthermore, the metric being discussed is overall S&P 500 earnings estimates and then that number is distorted into a dollar per share metric. It's just plain sloppy.

But that's The Gateway Pundit reporting.

If you use a percentage method they seem to be saying the S&P earnings estimate would drop from $170 to $150. That is a decline of 11.8%. But that is not the same as the S&P index dropping 11.8%.

Sent from my Pixel 2 XL using Tapatalk

 

[KenH]

Hah, no its not...

Yes, it is. Have you ever read a prospectus for a mutual fund? I have. Also, spent 38.5 years as an accountant.

 

[InTheLight]

The S&P 500 earnings estimate by Goldman Sachs is a decrease of $20 in earnings per share(EPS).

It's a bit more involved than that. It's the sum of median EPS estimates of all 500 companies in the S&P index.

Sent from my Pixel 2 XL using Tapatalk

 

[KenH]

If you use a percentage method they seem to be saying the S&P earnings estimate would drop from $170 to $150. That is a decline of 11.8%. But that is not the same as the S&P index dropping 11.8%.

Bingo!

 

[KenH]

It's the sum of median EPS estimates of all 500 companies in the S&P index.

That's what I wrote.

 

[InTheLight]

I just quoted word for word the article, like copy and pasting.
Stocks will decrease on average $20 per share is what it meant to me.

Well, you think that because that is how The GatewayPundit distorts it when they reported it. And you couldn't be more wrong.

That is not earnings per share. [/B]If the average price is 150 per share, after a Biden election, the election the average share price will be 130 per share. The average share price of the S+P companies is 150 dollars per share. Which means this is forecasting the price you can buy or sell 1 share of S+P stock as an average. Maybe 20% drop in the market is being forecast by them.

Both of your statements are laughingly incorrect. I mean laughing until crying.



Sent from my Pixel 2 XL using Tapatalk

 

[KenH]

NO company is earning $150 per share that is a common stock.

Let me help you out:

"Calculating the earnings per share for the index is a bit more complicated than the PE. It follows the same approach used to calculate the index itself: the market value of each of the 500 companies is added together giving a total is about $15 trillion today. Then to have a more manageable number for the index level, the $15 trillion is divided by a scale factor called the divisor. One can think of the divisor as if it were the number of shares outstanding of a company: a company’s stock price is its total market value divided by the number of shares. Likewise, a company’s EPS is its total earnings divided by the number of shares. The analogy is that the EPS for the S&P 500 is total earnings of the 500 companies, divided by the same divisor used to calculate the index."

Inside the S&P 500: PE and Earnings Per Share | S&P Dow Jones Indices.

Your welcome!

 

[KenH]

NO company is earning $150 per share that is a common stock.

This visualization from 4th quarter 1988 to 4th quarter 2013 might also be of assistance to you:

 

[InTheLight]

Let me help you out:

"Calculating the earnings per share for the index is a bit more complicated than the PE. It follows the same approach used to calculate the index itself: the market value of each of the 500 companies is added together giving a total is about $15 trillion today. Then to have a more manageable number for the index level, the $15 trillion is divided by a scale factor called the divisor. One can think of the divisor as if it were the number of shares outstanding of a company: a company’s stock price is its total market value divided by the number of shares. Likewise, a company’s EPS is its total earnings divided by the number of shares. The analogy is that the EPS for the S&P 500 is total earnings of the 500 companies, divided by the same divisor used to calculate the index."

Inside the S&P 500: PE and Earnings Per Share | S&P Dow Jones Indices.

Your welcome!

This will get you the number you are seeking but there might be an easier way to visualize it.

Let's say:
Amazon earns $9.00 per share
American Airlines earns -$0.50 per share
Anheuser-Busch earns -$1.00 per share
Boeing earns -$1.50 per share
Ford earns $1.00 per share

In this example of five companies the EPS estimate is $7.00.

Now repeat this exercise for all 500 companies in the S&P500. The article is saying after totaling up all 500 companies the end number would be $170. But if Biden were elected it would be $150.

 

[KenH]

The article is saying after totaling up all 500 companies the end number would be $170. But if Biden were elected it would be $150.

Yes, it is EPS, not stock price.

 

[Scott Downey]

This will get you the number you are seeking but there might be an easier way to visualize it.

Let's say:
Amazon earns $9.00 per share
American Airlines earns -$0.50 per share
Anheuser-Busch earns -$1.00 per share
Boeing earns -$1.50 per share
Ford earns $1.00 per share

In this example of five companies the EPS estimate is $7.00.

Now repeat this exercise for all 500 companies in the S&P500. The article is saying after totaling up all 500 companies the end number would be $170. But if Biden were elected it would be $150.

Ok, if it is a summing of all 500 companies earnings per share in theS&P 500, versus an average.
Since there are 500 companies in that index, I would think a summing would be much higher than 150$ per share., I was thinking an average not summing all together which would have thrown me off.

 

[Scott Downey]

Regardless, expect a market drop of a significant amount. But not as bad as the Covid-19 drop, is what I expect with a Biden election.

 

[KenH]

Regardless, expect a market drop of a significant amount

I gave up trying to figure out the stock market about 7 years ago. I turned my investments over to a financial advisor who understood my risk profile - willing to give up some potential gains in order to mitigate some potential losses.

 

[Scott Downey]

I gave up trying to figure out the stock market about 7 years ago. I turned my investments over to a financial advisor who understood my risk profile - willing to give up some potential gains in order to mitigate some potential losses.

My investment advisor is me only, into broad based mutual funds and index funds and only individual stock I own is EXC through a DRIP plan. The EXC was almost like a joke investment idea I started in the early 1980's, which has painlessly grown quite a bit. I put quite a bit into that for a few years, then cashed it out except for around 25 shares, then the stock cratered, so then bought a 100 shares and this has somehow grown back to almost 300 shares again. I used to individually trade stocks but the 2000 crash wiped me out of almost a million bucks, and I gave up on that idea. But I have steadily invested into the indexes and mutual funds ever since and it has grown significantly again. I also dont really need any of these shares having earned 2 pensions and SS which I plan to take when I am 64.

Another painless investment was I put in $50 a month when working for a couple decades into Savings bonds in the 80's for about 20 years. My mother bought into a fund decades ago that was biotechnology and hers out grew everyone else in the family.

My experience told me, it takes a long time to make money in stocks.

The funds I left alone and did nothing with except add money over the decades did the best of any other investment I made.

I am planning to cash out the savings bonds and buy an RV trailer to tow behind the dually truck and take the family on camping vacations, which they all seem eager to do.