The Magic of Phantom Growth. Bonus Round: Still 'Cheap' After Nearly Doubling? And the Trap Door Under the Market's False Floor.

If this quarter is flashing one big warning, for some companies it’s the illusion of growth.

Better yet, organic growth – or as my friends Bill Whiteside and Jeff Middleswart call it in their newsletter, Peek Behind the Numbers: “The organic growth illusion.” (They also run the independent long/short institutional research firm, Behind the Numbers.)

Here we have company after company reporting better organic growth, but... is it really?

As Jeff and Bill explained – and this was before the latest earnings deluge...

Investors must always remember that organic growth is a function of volume growth plus price increase.

And in many cases, they point out, “all of the recently reported organic growth” comes from price increases while volume has evaporated.

They cite such examples Conagra (CAG), the protective product segment of Sealed Air (SEE) and the tools unit of Stanley Black & Decker (SWK.)

This quarter the trend hasn’t just continued, but just eyeballing it, has accelerated…

Just look at a few…