Why the Bear Market May Not Be Over Anytime Soon
As of the end of last week, the S&P 500 and the Nasdaq were down 24% and 32%, respectively. Concerns of a possible recession combined with rising interest rates, inflation, supply chain issues, and a war in Ukraine are some of the main reasons the markets have faced a tough year in 2022.
But even though the markets have tanked so much already, investors should be careful not to assume that the worst is over. Here are a couple of reasons why the markets could still be struggling in the months ahead.
A big problem I'm seeing with some stocks is that, although investors are concerned about a recession being on the way, that isn't reflected in analysts' earnings estimates. Forward price-to-earnings (P/E) multiples are based on analyst expectations for how a business will perform next year. And if a recession is coming, then it would stand to reason that forward P/E multiples should look worse than the trailing ones (i.e., how the company has been performing over the past 12 months).
Source Fool.com
