Corporate earnings in the United States have literally fallen off a cliff since 2007 with reported S&P earnings down more than 30% in 2008 following a decline of about 16% in 2007. Increasingly, it’s becoming almost impossible to pick stocks that don’t decline several days following a purchase as economic news and earnings continue to rapidly deteriorate.

With many stocks in the bargain bin lately is now not an ideal time to accumulate cheap stocks? Well, maybe not…

Despite some huge values for many stocks following the massacre in the markets over the last 12 months, a slew of companies are still reporting horrible earnings. Worse, as stock prices decline the only pillar of support, dividends, are also being aggressively reduced or cut altogether as CEOs batten down the hatches and preserve cash-flow. Without dividend support, it’s almost a losing battle buying stocks in a protracted credit induced bear market.

Even defensive companies like the food and beverage sector have been hit hard lately – and not because of a slowdown in organic revenues. True, consumers have cut their spending and have started to reduce their purchases of premium brands and instead are buying cheaper supermarket labels; but some premium brands are still selling strongly even after a series of prices increases in 2008.

Great multinationals like Kraft Foods, which I personally own, has been sliced and diced this month because of unexpected earnings declines tied to a surging dollar since last July. Kraft, by the way, is also owned by Warren Buffet and Nelson Peltz – two formidable investors.

The strong dollar is causing all sorts of dislocations for American and foreign companies with foreign currency earnings. Unhedged, these companies have taken a big hit over the last eight months as the dollar has gone from the near abyss to soaring almost 20% against the euro.

Right now market leadership is dominated by gold mining stocks and the biotechnology sector. Biotech companies have been reporting generally healthy earnings and remain targets for the large-cap drug companies as they seek to replace patent expiring flagship medicines ahead of more competition from generic brands. Utility stocks also looked good until this week, when they started breaking down on Monday.

When this bear market finally ends, picking the right stocks really won’t matter. Equities worldwide have been so badly bludgeoned that investors will have a field day just throwing money at the indexes. And judging by the stock market’s reaction to the first New Deal in 1933, stocks might just double from current levels very quickly. From its low point in June 1932, the Dow subsequently skyrocketed more than 350% by late 1936 before crashing again in 1937.

Still, I’m in no rush to buy stocks as earnings continue to slide accompanied by a rising savings rate in the United States, which is historically bearish for equities. If consumers aren’t spending, the stock market won’t sustain a rally beyond a few months or weeks.

If you feel compelled to participate in a rally then consider convertible bonds and investment grade corporate debt. Both sectors have been hammered and offer a regular stream of income – something that’s hard to find in this environment of almost 0% interest rates with far less risk than stocks.

See you on Monday. Have a good weekend.