Et Tu, Dell?

For the past two weeks, I have presented a host of evidence that Price to Earnings (P/E) ratios would have trouble improving, even as actual profits and earnings grow in a modestly recovering economy. Changes in accounting standards, corporate governance and public perception will so change the rules as to how we measure profits, that public corporations will be fighting a strong head wind to show improved P/E ratios. Since this is a primary measure of the value of a stock, this "new profits era" will be a major downward pressure on stock prices for several years.

This week, several articles crossed my desk which illustrates this point perfectly. I bring them to your attention so that we can then explore the search for the bottom that seems to occupy so much of the thought process of analysts and economists.

Et Tu, Dell?

First, the indefatigable Dennis Gartman (more on him later) brings this absolutely stunning and deeply disturbing analysis of the earnings of Dell Computer. I…