Deceit on the Street : Bottoms up!

In the most recent Barron's Roundtable, gasbag Scott Black opines that the current 2009 earnings estimate for the Standard & Poor's 500 stock index is about $60 and that the market is trading for 15.5 times earnings.

You will hear a lot of that from the reptilian rapscallions that slither on the Street ... how can they just make up the number, if in fact the number is $42.26?

The difference is what S&P defines as bottom-up versus top-down. Without boring you with the methodology simply put the raw data shows that the actual earnings come in (after the fact) close to the top-down (lower) earnings estimate as opposed to the bottom-up (higher) earnings estimate.

In the raw data below, the first number is top-down, the second is bottom-up, the third in bold face is actual (called 12 Month Core Pre-Pen Int Earns per Shr) and the fourth in bold face is actual (called 12 Month Core Earns per Shr).

Again without drowning you in methodology, suffice to say that when the lying liars use bottoms up, 'tis your arse in the air. (Even given that I can't tell where Jackal Black came up with $60, he made that claim from whole cloth, picking a target between bottom-up and top-down.)

2009 81.80 42.24
2008 65.79 48.05
2007 82.54 66.18 72.51 70.83


12/31/2008
09/30/2008
06/30/2008 69.73 51.37
03/31/2008 76.77 60.39
12/31/2007 82.54 66.18
09/30/2007 89.31 78.60
06/30/2007 91.47 84.95
03/31/2007 89.36 83.15
12/31/2006 87.72 81.51 81.47 81.02
09/30/2006 85.92 78.57 78.76 76.69
06/30/2006 81.73 74.49 74.99 72.58
03/31/2006 79.20 72.67 71.59 69.81
12/31/2005 76.45 69.93 67.83 65.58
09/30/2005 74.21 66.57 64.68 63.41
06/30/2005 72.25 63.36 60.40 58.88
03/31/2005 69.81 60.32 58.30 56.59
12/31/2004 67.68 58.55 56.57 55.16