the hockey stick

Yesterday, Alhambra Investment Partners posted a revealing set of charts about earnings growth (or lack thereof).  So much focus is given to whether company reports beat estimates, but estimates don’t mean much if they have dropped like rocks in the months leading up to the reports.

That’s what we’ve seen of late — and the actual results have been lackluster to say the least.  But never fear, estimates for this year show remarkable growth is on the way:

Could that happen?  Sure.  But you might want to bet against it, since this is the way it pretty much always looks at this time of year, before the relentless decline in estimates begins.

If you are using sell-side forecasts, there are things you can rely on.  (Yesterday’s chart on research puzzle pix highlighted three of them.)  Another is that a hockey stick is almost assuredly baked in the cake.  Pull it out.