Do Earnings Matter + Roundup

The thing about earnings which investors sometimes forget is that they do not automatically end up in the investor’s pocket, and that earnings which actually get paid out do. Hence the premium which dividend paying companies have over non dividend paying companies. If earnings are not paid out, then they must be used effectively. One of the ways in which an investor can figure out whether or not companies are deploying earnings effectively is to determine whether or not the company’s book value is growing. see this link from Hussman for a more in depth discussion.

On another note, there was a scare in the sovereign debt market last week as the solvency of several countries were called into question. EMD took a hit as a result and yields increased to around 7.5%. If this continues to drift down and hits the 10% mark, I will scale in.

EEM has now dropped for four straight weeks and is now resting at last September’s low. I am a buyer, but do not feel the fear yet.