Why stocks still could face a 1980s-style drop

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A "meaningful fall" in earnings that isn't yet accounted for in U.S. stocks could still trigger a 30% drawdown, warns Principal Asset Management.

A “meaningful fall” in corporate earnings that has yet to be accounted for in U.S. stocks could still trigger a sharp drawdown that rivals the 30% drop of the 1980s, warned Principal Asset Management in a new outlook.

“With... A “meaningful fall” in corporate earnings that has yet to be accounted for in U.S. stocks could still trigger a sharp drawdown that rivals the 30% drop of the 1980s, warned Principal Asset Management in a new outlook. “With wage growth so strong and consumer anxieties building, corporate profit margins are being squeezed from both sides,” the team said. “Earnings growth is under severe pressure.”

EPS refers to net income divided by the number of shares outstanding, giving an indication of how much money a company makes for each share of stock.

 

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There isn't a day the market opens where it doesn't face the risk of a 1980's style drop. That is the risk and volatility of an auction market. There is also a possibility that stocks could rip 100% or more.

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