Quote for the Week
The common thread that runs through all equity bull markets is confident expectations of higher earnings ahead. The common thread that ties the onset of all bear markets together is the loss of those confident expectations of higher earnings ahead. History shows that bull markets can go well beyond rational valuation levels as long as the outlook for future earnings is positive.
Bull markets require economic slack so that companies can grow, and positive trends in real business activity to take advantage of that slack. Remember, stock prices show no consistent relationship to interest rates, exchange rates, inflation rates, budget policy, monetary policy or any of the other things we professionals love to discuss. These forces matter only when they matter to the future movement of corporate earnings. — Peter Bernstein (source)
From the Archives
Last Call
- Eyes Forward – Humble Dollar
- Thoughts at Mid-Year – G. Hoots
- Investment Heuristics Cage Match – Klement on Investing
- The (Uncertain) Payoff from Alternative Investments – Musings on Markets
- No Bad Risks, Only Bad Rates and Other Lessons from National Indemnity Founder Jack Ringwalt – Kingswell
- The Pope Hat Paradox – A Letter a Day
- The Positive-Sum Edge – The Leap
- What Makes Europe Better than America? – C. Arnade
- The Real Reasons Your Appliances Die Young – Wirecutter
- It’s True: The JAWS Shark is Public Domain – Ironic Sans