tr.v. dis·cour·aged, dis·cour·ag·ing, dis·cour·ag·es

1. To deprive of confidence, hope, or spirit.

2. To hamper by discouraging; deter.

3. To try to prevent by expressing disapproval or raising objections.

Source: TheFreeDictionary

I must freely admit that I am feeling a bit discouraged today. This morning, I woke-up early (as I usually do) and I marched downstairs to my computer with strong intention to find some positive news that I could share with readers. And, though there was positive news to be had, the overwhelming majority of news that I found is not good — actually, it’s downright bad!

Below are some of the headlines and news stories I found online and in my e-mail’s Inbox:

The last one is one I really need to expand upon.

Almost a fifth of companies in the Standard & Poor’s 500-stock index have reported earnings for the second quarter, and things are already looking grim.

At a quick glance, this quarter’s numbers look so-so. But they could, by some stretch, be fodder for the bulls calling for expansion in valuations. Earnings for S&P 500 companies are on track to grow 1.5% from the previous year. That isn’t exactly screaming growth—and is solidly below the 4.1% of growth analysts expected at the beginning of the quarter—but it’s not a decline, either. Of the 82 companies that have reported so far, 74% have beaten analyst estimates for their earnings. Sales are on track to grow a relatively meager 0.9% this quarter, but that marks a sequential improvement from their 0.1% first-quarter decline.

But the results look different when you leave out bank stocks. You know, the group with the exceptionally easy comparisons from last year? When financial shares are excluded, S&P 500 companies would actually see earnings shrink 2.7% from last year, according to FactSet. That’s worse than Wall Street expected at the beginning of the quarter, when analysts were aiming for a decline of 2.3% in earnings without financial stocks.

Sales are on track to grow just 0.1% if banks are excluded, according to FactSet. Any growth still seems like a good thing, right? But there’s one big asterisk on that growth. Kinder Morgan Inc. alone has contributed that much to sales expectations in the S&P 500, after a quarter in which its revenue grew 56% from the previous year.

Even when banks and Kinder Morgan are included, the top line still looks shaky. Companies are missing analyst estimates for their sales figures, with just 48% of firms beating expectations for the second quarter.

The pain probably isn’t over yet, either. A flurry of companies have announced that their second-quarter profit would be lower than expected. United Parcel Service said last week that its earnings would be worse than expected. Other companies that have recently warned about lower-than-expected profits include E.I. DuPont de Nemours & Co., Ingredion Inc., Valero Energy Corp., and Nabors Industries Ltd.

As of last Friday, 97 companies in the S&P 500 had projected that their second-quarter earnings will be lower than Wall Street’s forecasts, compared to 16 that had said their results would be better than expected, according to Thomson Reuters.

That is the highest rate of lower-than-expected guidance since the first quarter of 2001–making it pretty tough to be optimistic on earnings.

Source: MoneyBeat

I have often referred to myself as a “Pessimistic Optimist” which, in a way, is similar to Reagan’s “Trust but Verify” approach to viewing the world at large. I will see the glass as half empty but I will look for ways to refill it so that it will be full once again. In that vein, I will follow with this: In the movie “The Patriot,” Mel Gibson’s character, Benjamin Martin, at one point in the movie, states: “I’m a parent. I don’t have the luxury of principles.” The statement is one made during a formal discussion about the American colonists going to war with Britain and the concerns Martin had for his children. In much the same way that Martin felt that he could not be a “patriot” if it meant putting his children’s lives at risk I, too, feel that, for my young daughter’s sake, I can not be too glum or pessimistic and give-up hope — but, even my “tenacity” has its limits.

I realize that we (human beings that is) are creatures of habit and that, once we achieve success, we will continue to repeat those steps and practices that brought us success. BUT, we tend to fail to fully recognize changes when things stop working. Worst yet, it seems to take many people (at least those in charge) an exorbitant amount of time to adjust to the changes, while the rest of us are forced to adapt (as best we can) to those changes. The bottom line is this: Most of the ways we have done business over the last several decades no longer works and no longer applies — we need new strategies! Unfortunately, for the masses, however, those new strategies will come in the way of old strategies that have been made to look like new ones.

Recently, I caught the movie “Miracle” on one of our movie network channels. In the movie there is segment that replays President Jimmy Carter’s “Crisis of Confidence” speech. In the speech, Carter says: “For the first time in the history of our country the majority of our people believe that the next five years will be worse than the past five years.” That televised speech was delivered on July 15, 1979 — thirty four years ago! Does it ring any bells for you? It does for me.

If things are ever going to truly change for us (and, more importantly, for our children’s futures) there is going to have to be a collective effort on the part of the people of this great country to change the way our government operates. We can no longer afford to support nations around the world with our blood and treasure, whilst allowing our own nation to dwindle into the annals of history as “A Once Great Nation” or “Former Superpower.”

If we are to truly change to world, for the better — so that the next five years will, in fact, be better than the last five years — we are going to have to act, and act now! We need to tell our elected officials that they need to change their ways, and soon. Countries outside of North America are not the only ones in trouble.

CBS Evening News, 7/19/2013

Source: Link

Disclosure: I own shares of MSFT and GOOG, indirectly, through the Vanguard Total Stock Market (VTI) ETF.

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