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Tag Archives: Price earnings divergence
Earnings-Price Divergence Always Followed by Negative Returns
I recently wrote about the extreme divergence between earnings and equity prices, but did not have access to comprehensive historical earnings data until recently. In the article above, I referenced the past few years of earnings data, which was provided … Continue reading
Extreme Divergence: Earnings and Equity Prices
Earnings are the ultimate driver of stock prices and the divergence between earnings expectations and equity prices has become even more extreme. Given that the market is technically overbought, implied volatility is extremely low, the CBOE Skew Index is over … Continue reading
Q4 2012 Earnings Preview
Earnings season is here again, which provides a timely reminder that earnings are the ultimate driver of stock prices. The following article explores the recent trend in equity prices and earnings estimates.
April 2013: Most Extreme Investor Leverage Since 2001 Bubble
In a recent article “Earnings-Price Divergence Always Followed by Negative Returns,” I noted that every extreme divergence (-20% or lower) between year-over-year corporate profits and equity prices in the past 50 plus years was followed by negative year-over-year equity returns. … Continue reading →