Earnings: Why Solid Earnings Aren't Good Enough for Fickle Investors - CNBC.
Missing the point here (though the manager of the Palantir Fund does appear to get it) - my belief is that market participants are not seeing the top line growth necessary to make earnings growth sustainable. Earnings growth exceeding estimates is nice but when the growth is driven by cost containment it is not sustainable. So investors are recognizing that expectations for forward earnings growth are unsustainable and adjusting prices accordingly.
A recent analysis by David Rosenberg showed that after stripping out financials from the 20% of companies that had reported, top line growth year over year was 0%. That should not surprising in light of economic performance over the past year. It also should engender concerns regarding the ability of companies to continue to grow going forward. You can only squeeze so much blood from a stone.
Missing the point here (though the manager of the Palantir Fund does appear to get it) - my belief is that market participants are not seeing the top line growth necessary to make earnings growth sustainable. Earnings growth exceeding estimates is nice but when the growth is driven by cost containment it is not sustainable. So investors are recognizing that expectations for forward earnings growth are unsustainable and adjusting prices accordingly.
A recent analysis by David Rosenberg showed that after stripping out financials from the 20% of companies that had reported, top line growth year over year was 0%. That should not surprising in light of economic performance over the past year. It also should engender concerns regarding the ability of companies to continue to grow going forward. You can only squeeze so much blood from a stone.
