August’s publication summarizes one article that examines the degree of optimism in current earnings projections and another that discusses the utility of using forward operating earnings in valuations.

• “Optimistic Analyst Earnings Projections Amidst a Slowdown in Growth and Diminished Fiscal Support,” by Bob Prince and Jason Rotenberg, Bridgewater Daily Observations, July 27, 2010.
• “Valuing the S&P 500 Using Forward Operating Earnings,” by John Hussman, Hussman Funds, August 2, 2010.