Once when JP Morgan was asked what will the market do, he replied that it will fluctuate. That’s what the market does. Goes up and down on a daily basis. But in the long run it goes up over time. Why? Because price follows earnings. But why to earnings keep increasing? Because years ago things cost less. A candy bar cost a dime. Lets say the mantufacturer made 20% or 2 cents from each bar it sold. Now candy bars sell for 75 cents. 20% is now 15 cents. So the company is making more from each candy bar it sells. Overall the market should keep going up.
Spoke too soon! Now the market is down for today too!
Comment by Rob — April 25, 2006 @ 2:17 pm