einstein p fleet

Why Don't Earnings Matter Anymore?

To be honest, I've been wondering the same thing. POT had great earnings, guided up for 2008, has a solid balance sheet, and looks cheap based on 2009 projections. Yes, the global economy may be cooling, but is that going to mean that the world eats less?

When I look at home builders, retailers, and financial stocks, I find it difficult to understand the rational of buying these beaten down sectors on the hope that oil retreats to 80 dollars a barrel, the housing meltdown finally ends, and a tapped consumer decides to go on a full blown spending spree next year. Sooner or later things will get better, but how many times are we going to rotate into these stocks and get our heads handed to us before the move actually makes sense?

It seems to me that it's not just earnings that should matter in this type of market, but future earnings visibility. Several oil service, commodity, shipping, and infrastructure companies are not only printing money, but have huge backlogs of business.

Credit may be tight, but a lot of these oil, mining, and infrastructure companies are loaded with cash. The stocks of these companies have been mercilessly pounded over the last couple of months and look very attractive at these levels ---- especially to other companies in their industry that understand that the stock price does not even begin to reflect the fundamentals of these companies now and for years to come.