The following is the text of an e-mail I sent today to Subscribers of StockResearchPortal.com. StockResearchPortal.com is a research website that provides coverage on the approximate 1,600 Mining and Oil & Gas stocks listed on the Toronto and Toronto Venture Stock Exchanges.

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I have commented in previous e-mails I believe % increases in economic statistics as a barometer of an ‘economy’s recovery and well-being’ need to be carefully considered in the context of ‘what do those % increases really mean’.  From my perspective, a % increase is more likely to be a meaningful measure in a period of continual growth, as contrasted with today’s circumstances where % growth frequently is reported from a base that has significantly deteriorated in a short time span.  The following simple numeric examples better show what I mean:

·    continual growth scenerio:  assume the following Quarter/Quarter absolute $ results - 6, 7, 9, 11, 12, 14 and that the next quarter is reported as enjoying further growth of 7% (to an imputed ‘15′).  I would see such a result as being a potential meaningful indicator of ‘further good times ahead’ for two reasons, the result would be a continuation of a trend and would be a new ‘high water mark’; and,

·    growth reported after significant decline:  assume different Quarter/Quarter absolute $ results - 6, 7, 9, 11, 8, 5 and a ‘next quarter report of 7% growth (to an imputed ‘5.4′).  How big a deal is that?  It obviously depends, but on the basis that ‘one swallow does not a summer make’ such a result would not give me the same ‘warm & fuzzy’ feelings the previous example would give me.  Questions that obviously arise for me in such a scenerio are:  how certain is it this trend will continue, can we ever get back to, and beyond ‘11′ - and if we can, how long will it take, and so on.

From my perspective reports on % increases ought not to be taken at face value as certain harbingers of long-term prospective good tidings.  Rather, the absolute $ numbers need to be analyzed carefully to determine what the reported % increases really mean.  You can get a pretty good idea of what I am talking about by clicking on either of the following articles, which you can also access in ‘Today’s Filtered News’ on the left side of the Home Page of StockResearchPortal.com:

·    Stronger retail sales and sentiment boost stocks; and,

·    U.S. Consumers Driving Heady Q4 GDP.

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