New Video on the Economy and how it can impact Earnings dramatically.

When the economy slows, company revenues often slow correspondingly. With costs that might be more or less fixed in the near term (approximation) the impact on earnings can be very dramatic as illustrated via a simple example. Basically a small percentage decline in revenues can lead to a major decline in earnings.

New Video on Earnings at the Saving and Investing Channel on YouTube

Earnings can be one input into the valuation of a company, but as a standalone indicator, and when used for example in a P/E ratio, this can lead to conclusions that are not that solid. This is partly because earnings are an accounting result, but also because they can be very volatile - particularly if revenues and/or costs change quickly.