The ever-lowering bar of earnings expectations

*Earnings expectations start high and then drop consistently from there.
*A beat is only a beat based on the most recent estimates.

Third-quarter earnings in general may be beating analyst estimates, but those expectations have come down from a much higher starting point. Comparing actual earnings to the Q3 estimates that existed a year ago makes the results look terribly disappointing.

This pattern of earnings beating much-weaker estimates isn't only true for this quarter, but basically every quarter going back several years.

"We talk about it all the time here," said David Nelson, chief strategist at Belpointe Asset Management. "Analysts tend to have bullish estimates on their companies, but are forced back to reality as the year unfolds. It's also a component of the economy and data coming in worse then expected."

"It works in reverse as well," Nelson said. "Coming out of the recession analysts I'm sure were forced to up their estimates as the year went on."

This isn't only about company earnings, but the broader economy, too. At the beginning of the year, economists expected 2 to 3 percent GDP growth, and for the first half of 2016 the economy barely passed 1 percent.

"They want to beat Wall Street expectations." -James Swanson, chief investment strategist, MFS Investment Management

In the current quarter, earnings so far are tracking at less than 1 percent growth compared to a year ago. That being said, analysts are still expecting huge positive growth in the next few quarters, despite having a track record of seeing these optimistic forecasts inevitably fall.

"The difference in this quarter is that you're seeing CEOs talk positively about the future," said J.J. Kinahan, chief market strategist at TD Ameritrade. "A trend to watch going forward is expectations being raised down the road."

Other industry experts noted similar themes about the general habit of starting with high estimates and then dropping them later.

"Companies are optimistic about their great plans going forward, and analysts rely on corporate guidance," said James Swanson, chief investment strategist at MFS Investment Management. "As you get closer to reality, companies will talk analysts to a more realistic number. They want to beat Wall Street expectations. It's human nature and shows up every cycle."

But analysts and human nature seem to be getting better.

"It's not as bad as 2001 and 2002," said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. "By the end of this year, analysts will have to start addressing their 2017 estimates."

He also pointed out that a so-called earnings beat is a very tenuous thing. "Two-thirds of earnings beat the estimate of the day before. But if you go back 30 days, it's really only 50-50," he said.