What drives stock prices?
It’s simple: Earnings.1
For investors, anything you can ever learn about a company matters only if it also tells you something about earnings.
That’s because long-term moves in a stock can ultimately be explained by the underlying company’s earnings, expectations for earnings, and uncertainty about those expectations for earnings.
Jurrien Timmer, director of global macro at Fidelity Investments, recently shared a chart showing this straightforward relationship.
