Where is the Market Going Next?

A popular question we receive in review meetings is “where is the stock market going next?” We do not have a crystal ball, and to be frank, your guess might be as good as ours in the short term. We offer a long term answer to that question, which is: in the direction of corporate earnings! The chart below illustrates that the stock market’s performance moves over the long term with the direction of corporate earnings (which are a product of the economy and economic growth). With social media and 24/7 news coverage, it can be easy to get caught up in headlines and stories that can move the market in the short term. But taking a long term view of investing simplifies the practice to what is essential to the growth of investments, earnings. To quote legendary investor Ben Graham, "In the short run the market is a voting machine. In the long run, it's a weighing machine."