What’s Driving the Bull Market: A Wave of Earnings Growth

In the world of finance and media, there are often conflicting narratives about the state of the economy and stock market. Recently, with the S&P 500 reaching a new all-time high, there have been many voices in the media questioning the justification of the ongoing bull market. However, a closer look at the numbers reveals that many of the companies reaching all-time highs are also significantly more profitable than they were in the past. The largest 20 US companies have grown earnings at 15% per year over the last 5 years on average.

This surge in corporate profits has laid the foundation for a bull market based on the tangible success of these businesses. Of course, there are always risks on the horizon. I can think of a few that concern me for this coming year -

• Companies rolling their debt at now higher interest rates

• Geopolitical tensions spilling over to other parts of the world

• Stocks have already priced in growth and could be disappointed

However, the ability of companies to innovate and adapt to changing market dynamics should not be overlooked. In each one of these massive companies, there are thousands of employees waking up every single day focused on one thing - creating more value for shareholders. That drive is a powerful force if given enough time.

Happy Planning,

Alex

This blog post is not advice. Please read disclaimers.