The Dirty Secret Wall Street Doesn't Want You to Know

13 Apr 2026 · 1 min

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Wall Street uses GAAP earnings to rate stocks, but that's like a doctor diagnosing a patient by looking only at their ears. Economic earnings, which pull from the full financial picture, reveal the real health of a company and often contradict those buy ratings.

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It's just not one that's popular because if people talk about economic earnings too much, guess what? All those Wall Street buy-rated stocks, the illusion disappears. So specifically, economic earnings are better because they are based on the complete set of financial information: income statement, balance sheet, cash flow statement, and the footnotes. So you're taking into account the entire body of financial information. Gap earnings, it's like going to the doctor saying, I'm sick. The doctor looks in your ear and makes a diagnosis. You're like, how are you making a diagnosis just based on my ears? And he's, I don't know. That's what Wall Street told me to do.