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Friday, April 29, 2011

You Can Fool Some Of The People ...................

As a postscript to the April Moola Report, I wanted to point out an issue many people seem to ignore or not think about - and that is the effect of a devalued Dollar.

If listening to or viewing a financial show or reading a newspaper you hear or see the great earnings being reported by the large U.S. corporations and how they are all beating their revenue and earning estimates each quarter, and their stock prices are at record levels.   However, one must keep in mind that most, if not all of these large corporations be it Exxon or Coke, generated a large portion (at least 50% and in many cases much more) of their revenue and earnings from their non-U.S. operations.  Therefore with the Dollar at historic lows against most other currencies when locally generated funds are converted back to cheaper U.S. Dollars presto - you get more dollars which in turn unrealistically inflates reported revenues and earnings.

Best and happy investing!
Jim Lavorato

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