The long-term trajectory of stocks is ultimately determined by the company’s earnings and revenues, and the correlation is unmistakably strong at more than 90% — about as strong as any correlation gets in the real world. Occasionally, though, the two trends diverge, and stock prices drop, while revenues and earnings rise. Eventually, stock prices “snap back” to fundamentals. So, what comes next will be one of the biggest individual stock rally in the market’s history.
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