A brief 9-point guide to how everything affects earnings 📋

TKer's crash course on connecting news to the income statement 🧮🤓

There’s a lot of news out there all the time.

Some of that news can affect the earnings of publicly traded companies. Sometimes it’s clear how. Other times, not so much.

For investors, it’s important to understand how news affects earnings — because earnings and expectations for earnings growth are the most important long-term drivers of stock prices. (I’ve explained this in TKer Truth No. 5.)¹

But this is not easy to do. So, I’m here to help.

Early in my career, I spent the bulk of my time analyzing public company financial statements. Since then, I’ve found it helpful to think about news items in the context of how they could affect the various line items in these statements, particularly the income statement.

Below, I break down my mental framework for thinking about news. I’ve included some charts for historical context. And it’s all organized like a basic income statement.²