Stop Paying So Much Attention to Corporate Profits – They Really Aren't That Good of an Indicator

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Harrison Roger
Published on
Updated on

If you’re an observer or participant of financial markets for very long, you will find that you can’t ignore a discussion about corporate profits and how important they are for predicting equity market returns. The thinking is simple – If corporations ain’t making a profit, you aren’t making a profit. Is that really true? Here’s a look at corporate profits from 1960 through Q2 2015 and their connection (or lack thereof) with the return in the S&P 500. Corporate Profits, 1960 to Q2 2015 [drizzle]Here’s at look at the entire series. It’s difficult to inspect the potential connection with the…

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Roger is an economic adviser and active angel investor. He owns various economics firms. His work allows him a diverse group of clients across the globe, including the United States, Europe, and Asia. He holds a Ph.D. in business economics.