Stock analysts, investors, program hosts, and portfolio managers on television (herein, collectively, “financial commentators”), when asked their opinions of present stock market levels, commonly answer, “Well, we have low interest rates, low inflation, and decent earnings- so it creates a good environment.”
But, every one of those premises is false.
First, interest rates are low- but are rising- and are higher than they were. This means that the cost of capital is already higher than in the past- and, therefore, earnings growth will require revenue and/or margin growth to offset the increased operating expense. It doesn’t matter that rates are low- what matters is that they are higher than they were at the time of the last earnings reports … and going higher still. Every time a financial commentator points out “low interest rates”- in a vacuum- he or she misleads retail investors.
Second, there is such a thing as “good inflation”. Wages and incomes have to rise for a society and an economy to thrive and grow. Low inflation due to stagnant wages is a “bad” thing- not a good thing. Some wage inflation would help justify the extraordinary housing inflation we’re experiencing and make a bubble-pop in that market less of a risk. We “need” some inflation! Every time a financial commentator points to “low inflation” as being good for the stock market- he or she misleads retail investors.
O.k.- now, earnings. Earnings are only good in the technology industry, and only in some technology sectors, with some decent earnings in health care and some housing-related areas. So “decent earnings” is a broad, and, therefore, incorrect statement. For example, Amazon’s earnings are strong- while a multitude of retailers’ earnings are awful. Moreover, earnings analyses must be forward looking. How can a financial commentator point to “decent” earnings as justification for stock prices when earnings haven’t come out yet? That is a backward-looking statement. A competent financial commentator has to factor-in wages, the economic growth rate, and interest rates (among other things) to properly analyze future earnings in order to accurately evaluate present stock prices. With higher interest rates, and, thus, a higher cost of capital, a financial commentator would have to explain how revenue growth and margin expansion will contribute to future earnings to justify today’s equity levels (in addition to a lack of wage inflation, the economy is showing little PPI and CPI inflation, evidencing that companies have little to no pricing power).
How can a financial commentator not be “forward-looking”, and not determine that stagnant wages and rising interest rates can compromise earnings, and are likely, when taken together, sell-signs– especially with housing prices so inflated while wages are stuck and as short-term-interest rates rise? These are good signs for stocks? How will earnings grow if consumers’ wages don’t grow? How will margins expand if the cost of capital keeps rising?
Show us the future wage growth and the necessary consumer spending growth. Show us the future economic growth and the future margin expansion. Show us the stock multiple expansions as interest rates rise. Show us the future earnings growth across various industries- not just for the biggest company in each sector. Show us a rising yield curve that reflects expectations of growth and “good” inflation. Show us true financial premises that justify today’s stock prices and the likelihood of more price appreciation.
Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006
Neil Siskind is the Founder & Chairman of The Fatherhood Assignment

Learn more at: http://www.neil-siskind-the-fatherhood-assignment.org/
Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve

The Neil S. Siskind Nature Preserve is over 8 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.
Neil Siskind, Founder, “National Fatherhood Day” – March 29th

To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.
Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®
You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.
Neil Siskind’s Volunteer Work:
– Memorial Sloan Kettering Cancer Center, Volunteer
– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskind help children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal
– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm
– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving
– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/
Neil Siskind’s Pro Bono Work:
– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com
– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.
Neil Siskind’s Government Work:
– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern
Neil Siskind’s Community Assistance:
Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.
Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/
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