This One Chart Shows Why Predicting Stock Market Moves Is Ridiculously Hard

Every stock market forecast ultimately comes down to two things: earnings and the valuation at which investors are willing to pay for them . For the most part, strategists were spot on with their earnings forecasts. According to Bloomberg, strategists began the year looking for $107 in earnings for the S&P. A year later, the S&P is on track to earn $110. That’s a tiny margin of error. So, it’s pretty clear: everyone got the valuation wrong. The chart to the right represents a decomposition of what drives total stock market returns. As you can see, earnings growth looks stable relative to the wild swings in valuation. moved here
Full story: http://finance.yahoo.com/news/one-chart-shows-why-predicting-142726258.html

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s