Everyone believes that they're underpaid...

I'm sure that no one is surprised by the title of this post; we all believe that we're underpaid. More precisely, we believe that others are paid better than we are. The reality, however, is likely far from the truth. This differential between what people earn and what we believe that they earn comes from the fact that no one speaks about their earnings - we infer their earnings from their spending behaviour. With personal debt levels at all-time highs, this is undoubtedly a poor indicator.

For those of you unaware, I'm a Canuck. Up here north of the border, the average salary is about $27,500 for an individual living alone (this excludes students working part time or summer jobs that would otherwise drag-down the average). Shocking, isn't it? With all the talk about six-figure salaries, the reality is that a six figure salary more than four-times the average salary.

Most people spend beyond their means. They spend more than what they earn and incur massive debts in order to live like they believe their neighbors can in-fact afford to live. In trying to keep-up with the Jones', it seems that we're all chasing a lifestyle that very, very few of us can actually afford.

What does this all mean for those currently on the job hunt? Well, for starters, it should give pause in consideration of what sort of salary is actually deserved based on your experience and abilities. Of course, we all believe that we're above average - which, of course, can't be true - so we all demand salaries that are above average. There's no harm in believing in ourselves; it's a positive thing. I suppose that I'm writing this not to suggest that anyone suppress their earnings expectations, but rather than we think twice about what it is that we're actually worth. Think about it from the perspective of your employer or potential employer. What sort of value are you going to generate for them? If you're worth six-figures, then that would imply that you can generate at least that much profit (not revenue) for the company; can you?

Earnings Expectations, it's a game...

You have to wonder why every CEO doesn't work themselves to death to keep expectations for their companies' earnings as low as possible ...at least coming-up on earnings announcements, as we are today. The lower the expectations in the weeks prior to an announcement, the more likely is the stock to see a rise following even a met-expectations performance outcome.

You just have to wonder if this isn't all just a game.

How are individual (retail) investors to interpret what they hear from analysts in light of how easily swayed the markets can be by the opinions of those in-the-know at the companies in which they invest? The answer is that any interpretation is likely to be wrong about half the time. Even those with access to more information on the actual performance of publicly traded companies get it wrong about that often ...just look at the track record of the best analysts of late!

As tempting as it is to get caught-up in the excitement of earnings season, long-term investing is likely the only way a regular-joe investor can protect themselves against the affects of the games played on Wall Street. There is a new push to see top executive earnings tied more to long-term performance than stock price valuations from quarter-to-quarter. Hopefully this alignment of interests between those who run these companies and the folks who invest in them will benefit us all.