earnings
Price and Earnings.
So, today I thought we would get back to the basics, and build on our understanding of some of the underlying factors that are powering this market. Factors that we may have lost in the headlines. The very first thing that we look at in investing in any stock, is their earnings. Their future profits, which will pass through to those of us who own that stock in the form of dividends or capital appreciation. So earnings are ultimately, I believe, the key to understanding the long range price action of the stocks we own, and collectively of the stock market.
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How Profitable Are American Companies?
Each quarter all of the publicly trade companies in the country report their profits. This is a closely watched, carefully measured exercise, that is vital to the workings of the financial markets. From my perspective, these earnings reports are the primary driver of the stock market. If we boil investing down to its simplest terms: investing is the purchase of a company's future profits.
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