Over the last 12 months, the S&P 500’s advance was built on a narrow but relatively durable foundation – rising profit expectations, rather than investors willing to pay more for the same earnings.
That distinction is central to an outlook discussed by Ritholtz Wealth Management CEO Josh Brown and DataTrek co-founder Nick Colas. In their view, the rally’s quality matters as much as its size—and this one, so far, has been built on earnings, not euphoria.
At roughly 20 times the earnings, the scope for a further rally depends largely on whether analysts continue to lift forecasts—and whether risks from interest rates, oil and geopolitics ease enough to justify a higher valuation.
Brown and Colas review three bullish paths for the next 12 months, noting that each one demands evidence, not optimism.
Earnings Carry, Valuations Stay Put
