Whether earnings go up, down or sideways, in the long-run prices will follow. Over a short period of time price movement based on emotion may deviate. However, inevitably price will move to earnings.
Therefore, it’s much more important and, interestingly, easier to forecast earnings than it is price. However, most people take their cue from price movement.
Today’s video looks at price following earnings over various scenarios.
Best when viewed in full youtube screen.
Disclosure: Author Manages Portfolios Long PEP
The importance of earnings is undeniable. Short-term volatility is undeniable as well. However, volatility is much less important than business results in the long run. Smart investors know this, just ask Warren Buffett or Peter Lynch.
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