an tSionna {07.25.11-Earnings}

An earnings update from Chart of the Day comparing the rise in corporate earnings to gold.  Nice illustration to show you how we've devalued our currencey over the past decade.  This devaluation is why your grocery bill is 10-15% higher now than it was a year or so ago!

"One positive for the stock market has been the dramatic rise in earnings following the financial crisis. One reason for this earnings spike has been the fact that the US dollar has effectively been devalued. Slash the yardstick by which financial performance is measured (e.g. dollars to dollarettes) and relative performance will appear more positive. For example, when corporate earnings are measured in dollars, an investor will find that earnings are currently greater than what was achieved during the dot-com bubble and fast approaching the record levels that were achieved at the tail-end of the credit bubble. However, when measured in another world currency such as gold (see today’s chart), the earnings picture isn’t quite so rosy. Today’s chart illustrates how S&P 500 earnings measured in ounces of gold actually peaked back in 2001 and has moved within the confines of a dramatic downtrend ever since. In fact, the historic spike in earnings that began in the summer of 2009 doesn’t look all that historic with current earnings coming in at a level that is significantly lower than what occurred at the conclusion of the dot-com and credit bubbles."

Link:  Earnings vs. gold.

*Long ETFs related to the S&P 500 in client and personal accounts.