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Corporate Earnings Still A Mess
-- November 7, 2002

The markets have already priced a huge earnings rebound into stocks. But earnings reports from companies like Cisco should serve as a reminder for investors: The economy and corporate earnings still have a long, long way to go.

After all, stocks are still enormously overvalued. As we've noted before, Standard & Poor's just released a report that strips out the fluff from the financial statements of the biggest US companies -- and the results are downright awful! According to S&P;, combined earnings of companies in the S&P; 500 are only $18.48 -- 31% less than the $26.74 companies actually reported. That's a big, big difference -- and it shows that many CEOs are still not coming clean with investors, regardless of what Wall Street says.

With today's sell-off, it looks as if investors have started to realize that a Republican-controlled legislature and a Fed rate cut aren't going to be able to turn this entire economy around on a dime. And there will likely be much more downside ahead.

related article: Cisco's Dim Outlook Slams Stocks