401(k) savers: It could be a make-or-break earnings season for investors
Excerpts of article below:
The upcoming profit-reporting season could be a taxing one for anybody that owns stocks.
Indeed, 401(k) investors better hope CEOs are as upbeat about their companies’ future earnings prospects as Wall Street is when they talk about results for the final quarter of 2017.
The reason? Hopes are high. Perhaps too high.
The historic tax bill signed into law by President Trump on Dec. 22 that slashed the corporate tax rate from 35% to 21% has fueled a powerful stock market rally that has pushed shares to fresh all-time highs amid lofty expectations that corporations will make more money and the economy will grow faster.
“This earnings season is really about tomorrow and not yesterday,” says David Kotok, chief investment officer at Cumberland Advisors, a money management firm in Sarasota, Florida.
Investors will want CEOs in earnings press releases and conference calls to confirm that those upgraded growth rates are doable, warns MUFG’s Rupkey.
“It is the worry over future earnings that often causes traders to hit the panic button and sell, sell, sell if they feel the company’s outlook is not the positive one they were hoping for,” Rupkey says.
An upbeat Kotok doesn’t expect CEOs to deliver a negative message. “I expect strongly phrased positive conversation in conference calls,” he says.
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