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For 9 years corporate profits have gone nowhere. The same cannot be said about the stock market or earnings.

It's a tale of two reporting methods.

Reported Earnings vs Taxes

For tax purposes, corporations want to look as bad as possible.

Income and profit shifting are massive. Many of the largest companies pay no income taxes.

Reported earnings are another matter. Companies throw away anything and everything as "one time expenses". Then we have analyst estimates that are purposely low just so corporations can "beat the street" no matter what they report.

S&P 500 Earnings

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If you are a bull, then the above S&P 500 Earnings Chart gives you an excuse.

However, its pro-forma look nonsense that artificially makes stocks look cheap despite the fact that earnings always revert to the mean.

Shiller CAPE PE

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On a Shiller CAPE basis (Cyclically Adjusted PE) basis, this market is one of the most expensive in history, only exceeded by the stock market bubble in 2000.

Even then, there were huge bargains in some sectors, notably energy. Now there are just bubbles giving rise to the "everything bubble" meme.

Regardless, the charts are there and the analysts are cheering. It's easy to believe whatever story you want to hear.

For further discussion along these lines, please consider Where Will the Stock Market Be a Decade From Now?

Mike "Mish" Shedlock