--- title: Earnings Tumbled - Should You Worry About Your Investment Portfolio? description: Though earnings have seen a decline this year, there are reasons why it might not be so bad for your investment portfolio. image: http://www.wrapmanager.com/hubfs/Charts_for_Blogs/Earnings_Tumbled_JPMorgan_7.jpg --- [![Assembly Wealth](https://www.letsassemble.com/hs-fs/hubfs/Assembly/logos/Assembly-Wealth-Logo-Orange-500px.png?width=300&height=70&name=Assembly-Wealth-Logo-Orange-500px.png "Assembly Wealth")](https://www.letsassemble.com/) The Money Manager People TM [800-541-7774](tel:+18005417774) [![RESEARCH MONEY MANAGERS](https://no-cache.hubspot.com/cta/default/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5) [![Client Center](https://no-cache.hubspot.com/cta/default/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2) [Home](https://www.letsassemble.com/) WrapManager's Wealth Management Blog When life changes, we can help you thoughtfully respond. [< Back to read another post](https://www.letsassemble.com/wealth-management-blog) # Earnings Tumbled - Should You Worry About Your Investment Portfolio? Posted by [ Seton McAndrews | CFP®, Vice President Investments](https://www.letsassemble.com/wealth-management-blog/author/seton-mcandrews) October 7, 2015 - [Tweet](https://twitter.com/share) Corporate earnings had a rough go of it in the second quarter—total earnings for S&P 500 companies were down -2.1% from the same period last year, on -3.4% lower revenues.1 It would be one thing if earnings were falling while revenues went up, which would indicate companies may have spent more over the quarter on fixed investments, more hires, or higher wages, for example. But the data clearly shows that top line revenues are falling alongside earnings, which means there could be an issue with softening demand. As you can see from the chart below, earnings also fell from the fourth quarter of 2014 to the first quarter of 2015. With earnings getting weaker as [market volatility](http://www.wrapmanager.com/wealth-management-blog/what-to-do-about-creeping-market-volatility) increases and [China worries build](http://www.wrapmanager.com/wealth-management-blog/will-chinas-market-volatility-affect-your-investment-portfolio), investors may wonder if a more cautious portfolio strategy is warranted from here. **Figure 1. Earnings Have Been on the Decline Since Late Last Year** **[![Investment Portfolio Earnings](http://www.wrapmanager.com/hubfs/Charts_for_Blogs/Earnings_Tumbled_JPMorgan_7.jpg "Investment Portfolio Earnings")](http://www.wrapmanager.com/hubfs/Charts_for_Blogs/Earnings_Tumbled_JPMorgan_11.pdf)**   [Click for enlarged view](http://www.wrapmanager.com/hubfs/Charts_for_Blogs/Earnings_Tumbled_JPMorgan_11.pdf) ### 2 Reasons Earnings Weakness May Not Be So Bad [Moving your investment portfolio into a defensive posture](http://www.wrapmanager.com/wealth-management-blog/will-chinas-market-volatility-affect-your-investment-portfolio) as a result of weak earnings may be a bit premature, and it also may not take into account two important details: - **The Negative Role of Energy** – the Energy sector is the main culprit for the aggregate earnings decline in Q2. The sector got pummeled in the second quarter, as earnings were down some -60% with -30% lower revenues. The Energy sector thus had a disproportionately adverse impact on aggregate earnings for the S&P 500. If you take away the Energy sector, total earnings for the S&P 500 would have been *up +5.2% on +1.3% higher revenues.*1* * - **Analysts Expect Earnings to Recover in Q3 and Q4** – as you can see above in Figure 1, analysts forecast earnings to rebound in the back half of the year. As the chart also shows in looking back at past years, there have been other instances in recent history when earnings took a step back before resuming an upward climb. It will be something to watch closely, but it looks as though earnings may recover from this week mid-year patch as well.  ### Keep Your Eye on Earnings Going Forward It’s reasonable to expect that if earnings can grow quarter over quarter, that stocks have a reasonable chance of moving higher as well. But the opposite may also be true, which makes it important to keep your eye on earnings with each quarter that passes. If you have any questions about your portfolio’s positioning ahead of earnings season or would just like to discuss your investment strategy in the current environment, the Wealth Managers at WrapManager would be happy to spend some time on the phone with you or chatting over email. Just give us a call at [1-800-541-7774](tel://+18005417774) or [contact us here](http://www.wrapmanager.com/contact). ---  Sources; 1. [Zacks](http://www.wrapmanager.com/hubfs/PDF_Blog_Sources_/Zacks_Q2_Earnings_Report.pdf) 2. [JP Morgan Guide to the Markets](http://www.wrapmanager.com/hubfs/Financial_Article_PDFs/July_2015/JPMorgan_GTM_July_2015.pdf) [Investment Planning](https://www.letsassemble.com/wealth-management-blog/topic/investment-planning) [stock market performance](https://www.letsassemble.com/wealth-management-blog/topic/stock-market-performance) [![A guide to finding a better financial advisor](https://no-cache.hubspot.com/cta/default/10700/202250e7-ef82-4e50-a9c7-25c5bd555f4c.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/202250e7-ef82-4e50-a9c7-25c5bd555f4c) ### Subscribe to Updates [Subscribe to RSS Feed](https://www.letsassemble.com/wealth-management-blog/rss.xml) [![New Call-to-action](https://no-cache.hubspot.com/cta/default/10700/ffe2a394-957b-481b-9f80-4ef176bd6aaf.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/ffe2a394-957b-481b-9f80-4ef176bd6aaf) ### Most Recently Published ### Blog Authors [![Gabriel Burczyk](http://www.wrapmanager.com/hs-fs/hub/10700/file-2347381761-jpg/Athors_Avatars/Gabe-avatar.jpg "Gabriel Burczyk")](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk) [**Gabriel Burczyk,**](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk) [Founder & CEO](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk) [![Valerie De Vol](http://www.wrapmanager.com/hs-fs/hub/10700/file-2457588837-jpg/Athors_Avatars/Valerie-De-Vol-avatar.jpg "Valerie De Vol")](http://www.wrapmanager.com/wealth-management-blog/author/valerie-de-vol) [**Valerie De Vol, **IACCP® Chief Operating Officer](http://www.wrapmanager.com/wealth-management-blog/author/valerie-de-vol) [![Seton-avatar.jpg](http://www.wrapmanager.com/hs-fs/hub/10700/file-2344519198-jpg/Athors_Avatars/Seton-avatar.jpg "Seton-avatar.jpg")](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews) [**Seton McAndrews, **CFP® ](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews)[Vice President - Investments](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews) [![Doug Hutchinson](http://www.wrapmanager.com/hs-fs/hub/10700/file-2347381751-jpg/Athors_Avatars/Doug-avatar.jpg "Doug Hutchinson")](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson) **[Doug Hutchinson,](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson) **[CFA® ](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson)[Director of Research and Trading](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson) ![Katie - square.png](https://www.wrapmanager.com/hubfs/Katie%20-%20square.png "Katie - square.png") [**Katie O'Connor **Director of Client Services](https://www.wrapmanager.com/wealth-management-advisors/katie-oconnor) **Important Disclosure Concerning WrapManager Blogs** Blogs found at this site have been created or supported by WrapManager. 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