Apr

22

1. It is interesting to observe the earnings changes, surprises, and outlooks.

Here are some figures for S&P 500 from Bloomberg as of 4 18 2008:

number reported 100

higher 59

lower 41

weighted by cap -38%

pos surp 58

neg surp 42

Previously reported outlooks for the first quarter from sp 500 companies was 51 up an 146 down from previously reported estimates.

In short, the big companies , especially the financials reported down earnings, most companies reported up earnings relative to last year and previous estimates, and the estimates had been revised lower over the previous quarter.

Continuing operations earnings from most companies continue to be up, but non-recurring writedowns are not considered. And this is probably how the earnings increases each year tend to be much higher than the changes in book value adjusted for dividends.

2. One wonders these days if when some sectors show bad earnings, that apriori makes it likely that other sectors will show good. For example the financials show bad, but the others are good. 70% of companies are beating forecasts in all industries except fimancials. Presumably consumers and businesses have a fixed stock of desire for spending and when they don't spend it on one sector they spend it on others? 

3. The more I reflect, the more I am convinced that reading Patrick O Brian's works and Ben Green's is the best training for the budding speculator. The changes in strategy, the planning for all contingencies, the deception, and the proper framework for a trading platform are better covered there than anywhere else. The Nutmeg of Consolation is a good place to start for direct lessons in speculation . 


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