Ryan Detrick does a great job connecting the technicals with the fundamentals at Schaeffer’s. Here’s his look at how earnings have improved right alongside prices for those who complain that stocks have “come too far, too fast.”
We usually spend a lot of time talking about technicals and price action, but I want to take a close look at fundamentals — specifically earnings, since it is earnings season, after all. Everyone knows we are hitting new highs across the board, yet everyone is very concerned that we’ve gone too far, too fast. Well, something I don’t hear many mention is that earnings are also hitting a new all-time high this year. Now, it isn’t ever quite that simple, but here is a chart to show the whole story.
On a yearly basis (so combining the previous four quarters of earnings), you can see that earnings have gone up from $51 in early 2009 to $105 as of the first quarter in 2013. In other words, from the depths of the financial crisis, earnings are up an incredible 106%. That helps to put in perspective how much things have improved over the past four years.
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