What is the relationship between corporate earnings and stock market performance? The naive view says that higher earnings — or at least the anticipation thereof — leads to a higher market. But is it so?
Well, let’s just that it’s complicated. I’ll post some more slices of the data later, having spent some Excel airplane time today looking at S&P 500 earnings and market performance data back to 1960. Here, just to get you started, is binned annual earnings data for S&P 500 companies compared to average same-year stock market performance over the period.