Earnings; and Stock PricesSubmitted by Majerko Investment Management LLC on January 31st, 2018
I have been asked repeatedly lately, “Why is the stock market continuing to go up?”
My answer is always the same: “Earnings growth.” As you all know, I have always said that is what fuels the stock market in the long term.
If you look at the chart below, you can see that 4th Quarter 2017 earnings growth is expected at around +12%. Remember the stock market is a forward looking indicator hence the move in stock prices higher. That being said, valuations are not cheap and we haven’t had a correction in the market in a long time and we are due.
Quite frankly, I wouldn’t mind seeing one as I believe they are needed for a healthy stock market to go higher in the long term.
Isn’t that what we all want to see?