XJO - Bear Posts only (Factors which might cause the markets to fall), page-12042

"So still profitable, but the bottom line is falling."

Yes, and the dividends are falling too. Last month the full 12mth dividend on the asx200 was 8.5% (inc. FCs). Now its only 5.5% (see below). That's a huge drop! This number is also propped up by huge bumper dividends paid out by the big cap stocks like BHP over the last 12 months. So, when those bumper big cap stock dividends go back to normal, expect the xjo to be paying only 3-4% dividend - or less if China don't improve soon.

That's less than half the earnings of what we have been getting over the last two-three decades.

And its the same story everywhere. The dividend on the S&P500 is now only 1.5% - and the PE ratio is 25 (bubble territory). So, the S&P500 is way overvalued and a huge risk when compared to risk free US gov bonds that are returning around 5% p.a.

But it gets worse when you go shopping for yield. It seems the mega caps are holding up the indexes everywhere and the earnings from the average index stock is dismal - not worth the risk when compared to bank term deposit rates.

So what's going on? I think it might be a global generational problem. The millennials are just too lazy and not productive and this is beginning to affect profits. That's why businesses are looking for more workers. They hope they can find someone who can actually do the work.

Not sure how this is going to pan out in the long term but it has to affect the long term trend and could send many businesses broke.