Friday, November 03, 2006

When Falsehoods become Truth

There is nothing more difficult to prove than a falsehood that has been repeated so many times that it is assumed to be truthful. It is difficult to disprove after it has become accepted fact. Unfortunately, there are not enough of us to question things as they are presented to the public to stay on top of all the false statements.

For example, along with the following story

in the print version of Fortune magazine, on page 194, is a photo of a Home Depot store with the following caption: Boxed Out Home Depot's earnings rise and fall with home sales.

and here is the text from the article:

"While the price may drop further - the company's earnings tend to rise and fall with home sales - Home Depot is using its ample cash to revamp stores, make strategic acquisitions, repurchase stock, and boost its dividend."

Yet when I review the earnings history for Home Depot(Source:Valueline October 6, 2006), I can see no decline in Home Depot's earnings....ever. So how does one reconcile the facts with this story? Well, it would seem that the author of the story is not really talking about earnings. Nor is he talking about sales. The only conclusion is that whatever source of information being cited is referring to the growth rate of sales for stores open a year or more. I cannot be sure for I am still waiting to receive a fax which is supposed to support his claim.

It leaves me wondering how many others have read this article, tucked away the conclusion as factually true, and then may alter future investment or purchase plans because if it. I wonder how many others, if any questioned it.

I am certainly not trying to pick on the author of this story, but Jon Birger is a Senior Staff Writer at Fortune. For the potential size of his audience, I would hope that he checked the facts to support the conclusions that have been presented. For that matter, I hope he recognizes that sales and earnings are two different items, and how easy it is to verify information.


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