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« Weighing the Week Ahead: Will Consumers Open Their Wallets? | Main | Weighing the Week Ahead: An End to the Tapering Obsession? »

November 29, 2013



This blog is simply required reading. You're a madman Jeff, for this labor of love, but your readers deeply appreciate your insight.

TJ Vail

Hi Jeff,
My best guess for how they did the first chart is that they took the median analyst estimate in January for that calendar year, then the median analyst estimate in February for that same calendar year, etc., all the way through to the median estimate in December for the year just concluding, so that the December estimate should be close to the actual number. They then averaged all the Januarys to get 14%, all the Februarys to get 13%, etc., and all the Decembers to get a number “closer to the 5% average EPS growth we have seen over that period”.

On the surface, this does not seem unreasonable. However, your points about recessions and SOX are excellent. By averaging all the Januarys (instead of taking the median of all the Januarys), they would have given much greater weight to the recession years. And they say that estimates have declined in 29 of the 37 years. But based on the data in your table and in the squiggle chart, it seems that six of the eight up years have happened since SOX. That’s an important point that should have gotten their attention.

Thanks for taking the time to share your insights with us.

Clive jones

Jeff, the s&p earnings 12 month accuracy chart at the end of your post (great post, incidentally) seems key to me. But I have a question - does this chart provide an accurate representation of earnings estimates and from what sources? I'm thinking of doing some econometrics on this. Also, isn't getting the direction of change wrong as big a deal as the percent error? Appreciate your effort on this key topic.

Dal Paull


Jeff is hereby denied access to this week's "Silver Bullet Award" nomination process. His followers and readers now nominate him for this coveted award.


Another great analysis!

A Thanksgiving and Holiday Message:

Advice for Young Investment Professionals. If you want a successful investment business you need to attract customers. The methods to do this are not really correlated with your returns. The investment business is about sales, not trading.

Educators don't necessarily have to teach. Instead, they can provide an environment and resources that tease out your natural ability to learn on your own. A teacher gives, a teacher shares, but most of all a teacher cares.

Coaching is a life calling. What football coach said "He can beat your'n with his'n, and his'n with your'n"?

What is a good Mentor? We sincerely hope that you can apply these fundamental principles to improve the performance of your personal investments. As frequent readers will recognize, Jeff works these fundamentals into all his writing on A Dash. This is because these are exactly the same foundations on which Jeff has built his own investment management business.

Conclusion. The incentive structure for this sort of work is all wrong. Street research is not peer reviewed. It is often misleading. The top research teams get paid high salaries to do this full-time. Guys like me spend our evenings and holidays trying to shine a light. No one shares the underlying data, even if there is nothing proprietary about it. That raises the barrier for anyone trying to understand the work.

A Personal Afterthought. I consider myself very fortunate to have access to an Investment Professional, that does an outstanding job of Coaching, and is also guided by his desire to serve as a Professor and educate, as well as mentor in the form of emails, telephone, and in his selfless sharing of fundamental principles relating to personal investments.

“I would like to give you the highest compliment--I trust you” and additionally appreciate your personal approach and integrity. Best wishes to you and your family for the holidays.

Ron Hochuli

Jeff, thank you for the work you do. I find your insights spot on and appreciate the thorough way you consider all aspects of a problem. I particularly appreciate your reference to the work of other analysts you consider in arriving at your conclusions. After retiring from the financial industry I would like to give you the highest compliment--I trust you. Again, thank you--Ron



Thanks Jeff

BTW what do you think about this chart (unemployment rate):

It's not 100% accurate but is useful for hedges

Robert M

Thanks for taking the time to work through and reveal the underlying (and misleading) assumptions of the original 'chart porn' (which was more worthy of a zerohedge post than MS) Hope you award YOURSELF the silver bullet this week!

Derek H

thank you for this insightful post!

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