Outside the Box

Earnings Growth to Ramp Up? Call Me a Skeptic

October 22, 2013

In today’s Outside the Box, Sheraz Mian, Director of Research for Zacks Investment Research, gives us an overview of corporate earnings trends for the past several quarters and consensus expectations going forward, and asks, “How realistic are these expectations?”

Not very, he says, and tells us why. This is the sort of thorough, no-nonsense analysis Zacks is famous for. Zacks Investment Research was founded in 1978 by Len Zacks, PhD. Many innovations have come from this firm over the years, including the creation of the Earningps Consensus that many investors use now to compare versus actual earnings reports. Most notably, Len discovered the predictive power of earnings estimate revisions. He harnessed these benefits into the proprietary Zacks Rank stock rating system that has allowed Zacks Rank to compile an outstanding track record.

I am in New York for the next few days doing a media “tour” for my new book, Code Red, which will be out next week. I saw the book for the first time last night and sat down to read it again, skipping here and there, somewhat like a curious father viewing his new offspring. Co-author Jonathan Tepper and I will be speaking and sitting for a video as well. Tom Keene was very complimentary about the book this morning. It will hopefully be in bookstores this weekend.

The headline on Bloomberg as I send this note is “Europe Breakup Forces Mount as Union Relevance Fades.” You can go to the bank that this will mean the ECB will soon be issuing yet another Code Red version of easy money to try and smooth over a crisis. It’s a familiar pattern. And one that in the end will not yield the results they desire.

I hope this book does as well as Endgame. Tomorrow night (Wednesday) is the book launch party at the Hyatt Union Square from 5:30-7. It will be fun to see old friends and celebrate book #6. Come on by if you like.

Your hoping for more kind reviews analyst,

John Mauldin, Editor
Outside the Box

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Earnings Growth to Ramp Up? Call Me a Skeptic

By Sheraz Mian

Stocks have performed impressively this year and have largely been able to hold on to the gains despite monetary and fiscal uncertainties and the less than inspiring economic and earnings pictures. In a price-earnings framework for the market, most of the gains this year have resulted from investors’ willingness to pay a higher multiple for pretty much the same, or…

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Ronald Nimmo

Oct. 28, 2013, 1:42 a.m.

A few letters ago, John wrote that population decrease was on it’s way to becoming the world’s biggest demographic problem: Below is a chart of Egypt’s population change since 1882 taken from the Wikipedia article on Egypt. Draw your own conclusions about what the problem in the 3rd World is:

Historical populations in thousands
Year Pop.  ±% p.a. 
1882 6,712 — 
1897 9,669 +2.46%
1907 11,190 +1.47%
1917 12,718 +1.29%
1927 14,178 +1.09%
1937 15,921 +1.17%
1947 18,967 +1.77%
1960 26,085 +2.48%
1966 30,076 +2.40%
1976 36,626 +1.99%
1986 48,254 +2.80%
1996 59,312 +2.08%
2006 72,798 +2.07%
2013 84,314 +2.12%
Source: Population in Egypt[5]