We are getting more signs that there may be earnings disappointments on the horizon, but I believe investors are prepared for this. In fact, expectations were low coming into the third quarter, but I believe the market acknowledged that even if earnings were weak, valuations still weren’t stretched.


Also worth noting is the fact that companies have record amounts of cash on their balance sheets, yet most have not put this cash to use in any meaningful way — such
 as stock buybacks, acquisitions, or development of new products. To me, this indicates a lack of confidence from businesses. The ongoing conservatism on the part of company managements has been surprising. Businesses simply aren’t taking risks, but equity markets stand to benefit once they begin spending some of this cash.