Remember: Stock rallies are ultimately dependent on corporate earnings growth. As Ben Graham, the father of security analysis, reputedly said, “In the short run the market is a voting machine, but in the long run it’s a weighing machine.”
What the market weighs is earnings.
So how to assess “abnormal items” (such as merger costs, natural disasters, one-time sales, or any other unusual event) that skew earnings?
Continue reading “Show Me the Money”
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