Would you buy stocks if you knew corporate earnings would rise strongly for the next six quarters straight?
Many people would.
But take a look at this chart. It shows you that in 1973-1974, earnings per share for S&P 500 companies soared for six quarters in a row – while those same companies’ stock prices crashed!
It’s true: As earnings rose, stock prices experienced their largest collapse in 36 years. What’s more, after the S&P bottomed in early October 1974, earnings per share turned down for 12 straight months, just as the S&P turned up!
Believing in myths can cost you a huge amount of money.
Want to see 12 more myths that mislead investors every day? Robert Prechter’s The Socionomic Theory of Finance breaks them down – one by one. Read the first two chapters now, FREE.
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