Revenues? We don’t need no stinkin’ revenues!

Some people you just can’t make happy.

Like the proverbial rain that falls on a parade, a host of gloom-meisters are out dissing the current earnings season. Sure, earnings are way better than expectations. Sure, Ford, AT&T, and Caterpillar earned way more than anyone expected. Sure they’re in economically sensitive industries. But what about sales?

You see, most of these bottom-line gains have come from cost-cutting. If the economy remains in recession, a lower sales number will make future earnings growth really hard. So these perma-bears keep carping about revenues.

But this is what happens in recoveries. First the companies cut costs. Then revenues start to pick up. The lower cost structure allows margins to expand, and once the improved earnings picture is confirmed by increasing sales, the companies can begin to hire people back.

So why not wait for sales to pick up to invest? By then, the market will have already anticipated the recovery and gone up. In fact, that’s what’s happening now.
Even if some folks want to worry, it’s time now to enjoy the beginnings of the recovery.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

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By | 2014-09-04T19:07:59+00:00 July 27th, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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