A Dash of Insight carried a funny commentary on normalized earnings:
There is a simple solution if you do not like the reality of strong corporate earnings:
Talk about “normalized earnings.”
This has a wonderful scientific feel to it, lending an air of credibility to those who have not studied the subject. After all, don’t we want our estimates to be “normal?”
If the current strong earnings reports do not fit your forecast, you can just say that you want to “normalize” earnings without offering any clue about your method or how it has worked in the past.
If you don’t want to deal with reality, you can “normalize” things to make them more to your liking. Relative strength forces you to deal with reality. Price is price and it can’t be faked or subsequently revised. What is, is.
HT to Abnormal Returns
