Top 10 investment trends to watch in 2011

8. Earnings fall

Peter Zschunke/AP/File
This undated screen shot shows three phases of a photo of a banana, from left the original, the masked version and the result, that was bent with a tool of the new Adobe Photoshop CS5 software. Adobe Systems Inc., released better-than-expected earnings Dec. 20, 2010. But companies may find it more difficult to boost earnings in 2011, especially if they buy new equipment and increase depreciation.

If companies do decide to take advantage of the change in the tax code, investors may have to brace themselves for lower reported earnings, since companies will be increasing their depreciation. “Their cash-flow earnings will be fine, but they are likely to tell the analysts to expect lower reported earnings,” says Dickson. In other words, earnings day may be white-knuckle day as well.

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