Investors Shouldn't Worry About Falling Corporate Profits


Photo: Flickr – enor

Have you heard? Corporate profits are rolling over, despite the fact that the economy seemingly has traction.So is this a good reason to jump off the market rally?

Here’s an interesting nugget from Paul J. Lim at the NYT:

…there is virtually no correlation between earnings growth and stock price movements in any single calendar year, said Doug Ramsey, chief investmentofficer at the Leuthold Group.

Mr. Ramsey has studied market performance going back to 1938, and has discovered that in the 16 best years for stocks, eight actually coincided with declines in corporate earnings. And profits rose in 13 of the 16 worst years for stocks.

See also: Q1 earnings are now expected to decline >

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