Wars, unemployment, the Fed…. Greenland — noise is and always will be abundant in financial markets. This noise isn’t all bad, and it’s our own job to parse through it, but as we see time and time again, what really matters for stocks is earnings. Ultimately, a lot of factors affect earnings, but the trajectory of those earnings is the long-term driver of stock prices. The chart below illustrates this over the past 25 years. Forward-looking earnings (after all, the stock market is a discounting mechanism) track against market price returns closely.

There are certainly ebbs and flows, times when the market gets ahead of itself and vice versa, but overall, the path of earnings and the path of stock prices align.

That being said, expectations for Q4 are very strong…