Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell

Chapter 8. Relative Reported Earnings Growth Selection

Predicted earnings for companies are generally inadequate out to a year and beyond. For this reason, I use only reported earnings, hoping that the company reporting them is not taking too much leeway. I have read numerous studies on earnings and learned how popular the use of earnings can be for investors. Unfortunately, few have studied whether earnings reports or projections—although they intuitively sound like a reason for investment—have actually faired in the real world. The anticipated earnings are usually wrong and, indeed, one commentator stated that an investor is better off using reported earnings than those anticipated by security analysts. That is precisely what I do. I use only ...