I just read your column entitled “Confessions of a silver optimist.” What do you mean by the Dow Jones Industrial Average’s “earnings”? Such a concept is new to me. Does someone index the earnings of the companies listed? And if so, why? And what time period are we talking about? Earnings per year? For the companies on the index? $132.14 earnings on an index of about 11,000? Sounds like a terrible return. Or is it? Don’t have the foggiest. I Googled ““down jones industrial index” 132.14” and got only three hits…all of which were coincidences….nothing to do with “earnings” of the DJIA. Please explain.

You state “…in case you are not impressed with a 10% fall in earnings…..”. Frankly, no, a 10% swing in earnings is pretty much nothing, normally, Mr. M. It doesn’t impress me in the slightest. Although, now that I think about it…these days….if the average company on the DJIA only reported a 10% drop in earnings from last year to this, I’d say that was cause for celebration…I’d say the economy has turned and a bull market has started. The Dow should go up. What’s your problem with such a minor change in these turbulent times?

Next, if there is such a statistic as earnings for the DJIA, you should not be surprised by a disconnect between a single year’s/month’s day’s earnings and the value of the index. The value of a company’s shares would not react to a single unfavourable earnings announcement unless (1) the downturn is a surprise and (not “or”) (2) the downturn is a reflection of long-term reduction in earnings potential. My company just reported a loss of $124 million for Q2, far worse than the same quarter last year when we lost only $32 million….but our stock barely changed. Why? Because (1) the $101 million asset write-off we did wasn’t a complete surprise to the market and (more importantly) (2) the write-off didn’t reflect impaired future earnings.

You go on to say “…who are these idiots buying these stocks?” They might be the folks who buy low, sell high, Mr. Mo. Yes, those idiots. Morons, I guess?

Also “..a little of this buying had to do with some panicked short-covering….all of this corruption and stupidity”. Short-selling and short-covering is corruption and stupidity? Hmmmm. What left-wing school did you get brainwashed in?

By the way, I like your editor’s note: “The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.” Back at ya, Mr. M!