Why did BoA tell investors to "take profits"?
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Why did Bank of America advise investors to 'take profits'?
Olen Shannon Maldonado, käsintehtyjä artesaanituotteita myyvän Jaui lahjakaupan perustaja. Valitsin Shopify, koska alustoja testatessani totesin sen ehdottomasti yhdeksi helppokäyttöisimmistä alustoista. Minulla oli tärkeää pohtia kehittymistämme tulevaisuudessa. Kaikki myyntiin tarvittavat työkalut, kuten varaston suunnittelu, ovat kätevästi dashboardissa. Aloita ilmainen kokeilu shopify.com-sivustolla.
Hey, so here's a question. What do strawberry jam and stock market analytics have in common? Stick around. We'll tell you. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Risdell. It is Tuesday today, 9 June. Good as always to have you along, everybody. The Strawberry Jam comes to us from the JM Smucker Company, to which we will get in just a second. The Stock Market Analytics come to us from Bank of America. The Setup comes from us, and it goes like this. These are, broadly speaking, headlines. Heady days in the equity markets. Record highs practically every time you turn around. Everybody you can think of is filing to go public, and trillion-dollar companies are basically table stakes now. However, comma, Bank of America is singing a different tune. In a note last week, B of A, which I should tell you advertises with us, said there are, and this is a quote, too many red flags, end quote, pointing to a market peak, and that it is time to, again I'm quoting because these words matter, take profits.
So...
Marketplace's Henry Epp gets us going. Stock market analysts don't really speak in plain English, so when they recommend investors take profits... They're really telling people to sell, but they're trying to do it in sort of a market etiquette way. James Weston is with the Rice University Business School. Bank of America declined an interview request. In the report, its analysts offer a couple reasons why now might be the time to sell. One, there are concerning signs in the real economy, says Weston.
We're seeing worsening fundamentals in consumer spending.
We're seeing worsening fundamentals in consumer indebtedness. We're seeing a big rise in the price of oil.
Two, the value of publicly traded companies is really high right now, especially tech companies. Derek Horstmeyer is a professor of finance at George Mason University.
When we talk about valuations of companies, we usually measure it based on the price of the company to their earnings. And right now that's at a very high point.
Some tech company shares are really expensive given how much revenue they actually generate, which could mean investors are being overly speculative or that the market is nearing its peak, which is why you have analysts saying it's time to take profits. The problem with making that call, says Ben Carlson at Ritholtz Wealth Management, is it's really hard to get right.
There have been people who've been trying to call the top on this for 10 years now.
But the market has just kept rallying. So yeah, this might be the moment the stock market hits its peak, or it might not. Larry Adam is at Raymond James, another marketplace underwriter.
So until we see major fundamental changes to the economy, to corporate fundamentals, to what the Fed is going to do, we would not recommend making major changes to a portfolio right now.
For those who do think it's time to sell, there's a risk in saying that out loud, says James Weston at Rice.
If you tell everyone to sell and everyone all sells at once, that triggers a market crash.
Which is why analysts use language like take profits. I'm Henry Epp for Marketplace.
Wall Street on this Tuesday, there was a little profit taken. Actually, we will have the details when we do the numbers.
You were promised strawberry jam, so strawberry jam shall there be. Smuckers, home to Folgers Coffee, Hostess Twinkies, of course, and the aforementioned preserves. Reported results today, net sales up 4%. Uncrustables, it turns out. Those frozen PB&Js were a standout. But the company said the year ahead is not going to be as good because of, and this is a quote, I'm doing a lot of quoting today, "...a dynamic and evolving external environment."
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