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Subject:  Earnings, Schmearnings! Date:  2/11/2013  7:44 AM
Author:  lobodoug Number:  415584 of 459228

Here are two articles by Lawrence Fuller that make a good case for a bearish near future:

http://www.seekingalpha.com/article/1160281-the-looming-rece...

http://www.seekingalpha.com/article/1170551-as-stock-prices-...

His main point is that operating earnings are coming in lower than the previous quarter, and thus it looks like 2 quarters of declines in a row. He states that when this occurred previously, well you can probably guess.... Past occurrences since 1988 (his earliest data)would be the last two quarters of 1990, the last two quarters of 2000, and the last two quarters of 2007. Hmmm. That is an interesting set of data.

I swung bullish recently because early signs were that earnings were coming in stronger. But, as we all know, companies actively game earnings reports. Operating earnings are typically considered a good means of evaluating core business potential - what is the base profitability, i.e., earnings before interest and taxes? I am not a wizard at business accounting, so can not say that this metric deserves more attention (or less) than GAAP earnings. However, I found the articles interesting. As always, if I am bullish, I look for articles that challenge that perspective, and vice versa. This is making me strongly reconsider my current bullish stance.

For what it is worth, I have never heard of Lawrence Fuller and he has written very little on Seeking Alpha. However, his resume shows many years in money management, so he is not just some crank writing to stroke his ego.

Thoughts?

Cheers,

Doug
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