What Will "Normal" Earnings Look Like?

A lot of strategists and investors have been talking about what the “new normal” will look like as the economy recovers from the recent financial crisis and unwinds the excess leverage that many companies and individuals had been using. Mike Thompson, managing director of Standard & Poor’s, offers some interesting thoughts on that new normal in this interview with CNBC.

According to Thompson, companies had spent two decades building more leverage into their business models, and earnings increased along with that upping of leverage. Now, with a massive deleveraging going on, he says the big question is what kind of earnings multiple investors should expect from stocks going forward, in a new era of lower leverage.

S&P's Thompson on Earnings

Send a Comment

Your email address will not be published. Required fields are marked *