The following comes to us courtesy of Data Diary:
In October, we had a look at Goldman Sachs earnings forecasts for the S&P500 (Giving lemmings a bad name). Figured it was about time that we had an update:
The changes on 2010 forecasts – allowing for the fact that the numbers don’t add up (rounding errors presumably)?
- Energy -$3
- Information technology +$1
- Health Care +$1
- Financials Operating EPS -$2
- Provisions & Writedowns -$1 (ie. less writedowns)
Net the assumed rounding effect, the change in S&P500 EPS ex-P&W was…nothing.
Turning to the 2011 forecasts, the numbers that stand out to me are Energy (+50%), Materials (+50%), and once again Financials (+58%). Higher commodity prices to drive earnings in the energy and materials sectors (go figure). And for the Financials? I thought the 2010 results had the risk revaluation trade to thank (or more correctly, QE) – certainly lending has become a side business as banks hoard cash as seen by the drop in credit and M3. Wonder then what is going to deliver the 2011 gains?
Source: Data Diary
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.