Stock market earnings have been impressive, but nothing like the 1990s

The Covid-19 pandemic has been like a hurricane that has disorganized all the forecasts that analysts handled before its appearance.

After the pandemic, experts need to recompose their analysis, adapting them to the new situation. Over the months, the uncertainty has been easing. However, it has not entirely disappeared. Forecasts have been normalizing in recent months, and there is already a roadmap that investors can follow.

When it comes to corporate earnings growth, things seem to be slowly getting back on track. Experts expect an increase in profit for the next few years. They mention monetary and fiscal policies that the authorities have adopted worldwide to justify their predictions. According to Fidelity Investments, public spending and favorable monetary policies have cushioned corporate profits and household wealth.

The firm stated that consumers are forced to accumulate wealth due to the reduction in spending options. They are currently showing savings rates at historical highs. As the confinements are lifted, the release of only a part of this savings should sustain a robust recovery.

Are we heading into a bull or bear cycle?

Other analysts, such as Peter Oppenheimer, chief global equity strategist at Goldman Sachs, rule out that the market is in a bubble situation despite the high valuations in which the stock trades. Also, he doesn’t believe the market is approaching the beginning of a new bear market. He considers that both the fundamentals presented by companies and the fact that we are in the first steps of a new bullish cycle suggest that bubble formation is still a long way off.

Regarding the S&P, he considers that the increases in recent years have been “impressive. However, they’ve been nothing similar to those that occurred during the 1990s, which led to the dot-com bubble bursting at the beginning of the 21st century.