Earnings and Stock Returns

I walk along the city streets
You used to walk along with me
And every step I take reminds me
Of just how we used to be
--Naked Eyes

Simple but interesting scatter plot of sector earnings growth over the past decade vs sector returns over the same period.

Strong correlation between earnings & returns by sector@biancoresearch pic.twitter.com/N2CdSElBpr

— Liz Ann Sonders (@LizAnnSonders) January 8, 2020

Pretty good R-squared associated with this relationship, me thinks.

Note lagging performance of energy. My sense is that low valuation placed on this sector as a result of this historical performance offers opportunity going forward.