Archive for September, 2011

Will it ever end?

I’ve been hearing Obama talking big about cleaning up Wall Street for a while now. So, I just had to laugh when I heard Maria Bartiromo talking about the upcoming earnings season that will be starting the first week or so of October. She basically said that once earnings season gets here, investors will stop focusing on the problems in Europe and focus on the US company earnings results.

That wasn’t the part that made me laugh however. What made me laugh is that the guy who was with her said that analysts were already starting to lower estimates across the board due to the current economic situation around the globe. Maria then emphasized the importance of these earnings in determining what is really happening out there. Seriously Maria, how the hell can we know what is really going on out there if the analysts are just going to move down the expectations making the results look better than they actually are.

Does anyone else out there besides me see and understand the irony here? I mean really, if we keep lowering the bar and accept lousy results that we call good because we lower the expectation down to the actual result then according to these “pie in the skyers”  we have never been in a recession. We are always in the days of wine and roses!

When will this nonsense end? When are we going to allow companies that don’t do well to get punished for their lack of performance in the same manner that we praise and reward companies that actually do well? When will we stop constantly lowering expectations to make companies who are not good look good?

It is not just Wall Street and the analysts who are guilty of this conspiracy, it is the media too! The media always plays up when companies beat estimates even when the estimates are cut substantially and more! The media never reports that the company beat estimates but the estimates had been cut in half in the past two weeks, do they? It would make a big difference to me….how about you?

When will the powers that be understand that this earnings estimate game that Wall Street plays so well and that the media is an unwitting accomplice to is dangerous and misleading to investors? Maybe, they all actually want it that way. If that is true, then it will never end!