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The Earnings Mirage: Why Corporate Profits Are Overstated And What It Means For Investors

TedTed
in Fund Discussions
FYI: In this piece, I'm going to introduce a new methodology for measuring the profitability and valuation of corporations. In applying the methodology, I'm going to encounter a massive discrepancy in corporate capital allocation. To explain the discrepancy, I'm going to attempt to show that reported company earnings are systematically overstated relative to reality. After identifying the likely causes of the overstatement, I'm going to explore their implications for individual stock selection and overall stock market valuation.
Regards,
Ted
https://osam.com/pdfs/research/The-Earnings-Mirage-Whitepaper-2019.pdf

Comments

  • Edmond
    Well,at 108 pages, he certainly put a lot of work into it! He must have been evoking his inner Tolstoy when compiling this tome. I stopped after about 7 pages. I am certain there is a great epiphany in there somewhere, but life is too short.

    Are earnings really a "mirage"? I guess all those Big 4 CPA firms are in on the conspiracy? Is book value systemically understated due to inflation (and other causes)? Yeah. But its no secret, nor is it a mirage.

  • Guy
    Lol!
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