Note from dshort: Recent guest contributor Ed Easterling of has posted an updated report on his Crestmont Research website. I consider it "must" reading for anyone whose investment strategy is influenced by the direction of corporate earnings. Below are the opening paragraphs followed by a link to the full report.

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In April 2007, while forecasters predicted at least two more years of increases, the first "Beyond The Horizon" article stated:

"Earnings have increased at double-digit growth rates for five consecutive years — although many agree that earnings growth may be slowing, it's beyond almost everyone's foreseeable horizon that earnings might actually experience a decline."

By the end of 2007, earnings per share (EPS) for the S&P 500 declined versus 2006.

By the end of 2008, after an 80%+ decline in reported earnings, it was beyond almost everyone's horizon that reported net earnings would recover to more than $90 per share over the subsequent several years ... yet this year's forecast is now $95 and next year may break $100.

Rather than rehash old ground, this article will provide a speed-round of charts and limited commentary to explain the current conditions and the expectation for an earnings decline within the next few years. Once again, since the fundamental principles of the business cycle cause history to repeat itself, a decline in EPS should not be beyond your horizon!

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The full article with fascinating graphs is available at www.CrestmontResearch.com as a PDF file.