Correlation between Stock-Market-Returns, GDP Growth and PE Ratios

In an earlier article, we discussed the primary factors that drive long-term stock market returns. Namely: Earnings yield Real GDP growth Inflation We also discussed ignoring fluctuations in the PE Ratio, because: PE ratios tend to be cyclic, and do not increase or decrease in perpetuity Over the long term, fluctuations in the PE ratio … Continue reading Correlation between Stock-Market-Returns, GDP Growth and PE Ratios

What drives Stock Market Returns?

“The stock market is nothing more than a ponzi scheme” “It’s all just fake money” “Stocks prices are completely arbitrary. It can rise or crash any day” Chances are, you’ve heard some variation of the above, many times in your life. It’s hardly surprising - stocks play a crucial role in our economy and personal … Continue reading What drives Stock Market Returns?