WrapManager's Wealth Management Blog

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Earnings Tumbled - Should You Worry About Your Investment Portfolio?

Posted by Seton McAndrews | CFP®, Managing Director & Chairman of the Investment Policy Committee

October 7, 2015

Corporate earnings had a rough go of it in the second quarter—total earnings for S&P 500 companies were down -2.1% from the same period last year, on -3.4% lower revenues.1 It would be one thing if earnings were falling while revenues went up, which would indicate companies may have spent more over the quarter on fixed investments, more hires, or higher wages, for example. But the data clearly shows that top line revenues are falling alongside earnings, which means there could be an issue with softening demand.

As you can see from the chart below, earnings also fell from the fourth quarter of 2014 to the first quarter of 2015. With earnings getting weaker as market volatility increases and China worries build, investors may wonder if a more cautious portfolio strategy is warranted from here.

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