Goldman's calling $SPX 8700 in 12 months, with earnings up 11% over two years. Everyone's bullish again.
But here's the pattern: we've seen this exact 45-degree angle of rising estimates before — December 2021, January 2020, January 2008, January 2000.
You know what happened next in each case.
Consensus estimates are wonderful at extrapolating the present. They're terrible at predicting mean reversion. The crowd never sees the turn coming because the numbers look so good right up until they don't.
This isn't a call to panic. It's a reminder that valuation matters, cycles exist, and straight lines don't last forever. When everyone's pointing to the same rosy forecast, that's usually when you should double-check your assumptions.
History doesn't repeat, but it sure does rhyme.
But here's the pattern: we've seen this exact 45-degree angle of rising estimates before — December 2021, January 2020, January 2008, January 2000.
You know what happened next in each case.
Consensus estimates are wonderful at extrapolating the present. They're terrible at predicting mean reversion. The crowd never sees the turn coming because the numbers look so good right up until they don't.
This isn't a call to panic. It's a reminder that valuation matters, cycles exist, and straight lines don't last forever. When everyone's pointing to the same rosy forecast, that's usually when you should double-check your assumptions.
History doesn't repeat, but it sure does rhyme.
