Using the RPF Model to Translate Punditry 123 In many cases, that's because corporate profits expand so fast that their growth outpaces rising share prices. In other words, as the "E" in the P/E ratio grows faster than the "P," the multiple contracts even as stocks gain ground. 4 Of course, P/E declines when P grows slower than E--that's just math. It can't happen any other way. But saying "corporate profits expand so fast that their growth outpaces rising share prices" implies that that market is slow to respond, rather than what actually happens--P increased because the market anticipated the increase in E. While this is likely just an attempt to simplify the story, reading it literally can be confusing. It is important to read into these stories to understand what the author or expert is trying to convey. This becomes clear near the end of the article, where he makes the point that the market needs more E--that you should watch earnings. And, in fact, the article finishes by discussing several prominent analysts' expectations for a significant increase in earnings, which would lead to an increase in stock prices. The key point: analysts expected earnings to rise in 2010, which would drive the market higher--they did and it did.