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Turley Muller

Terrific article!

I completely agree with your analysis. I don't see any other logical conclusion that can be drawn. I had commented about the same anomaly on my blog. I invite you to take a read.


Brian Dulger

Can you explain what "bottoms up" and "top down" means in the estimates context?

Many Thanks!

Walt French

Brian, S&P takes the consensus of all analysts who cover a stock, and adds up the 500 such consessa (?) to build the "bottoms up" view. Meanwhile there are some analysts who take a stab at the 500-stock total, based on macro-economic or other such views -- "top down."

There's often a goodly difference. The top down guys can take an educated guess based on the most recent signals while the bottoms up analysts are maybe better at differentiating the buzz between competing firms in the same industry, and typically can't pick up the sensitivity to recent news about consumer confidence, etc.

Jerry Stewart

Dear sir, Why are you suddenly defining P/E - as PRICE to OPERATING EARNINGS? P/E is defined as PRICE to EPS - no OPERATING EARNINGS (which are earnings before all the bad things)

If you stick to the regular defined P/E - and use an estimated NET PROFIT EARNINGS of (say) $54.82 for the S&P 500 - then at current price of $940 - the P/E would calculate at 17.15.
That is HIGH for a recessionary period. If you use a P/E of (say)
12 - then the S&P500 could be $658.
You are WAY too optimistic. Jerry Stewart


When I go to S&P link you list it shows me "operating earnings per share" and "as reported operating earnings per share". This may be a dumb question - but what is the difference between these? e.g. what does an "as reported" EPS mean for 12/31/08 which has not occured?

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