Perma-pessimists claim speculators and investors are about ready to be hit by a collapse in U.S. stock markets. For years, others have preached much about stock markets. Supposedly, stock market players are "forward looking." As well, stock markets are supposed to be "discounting mechanisms."To see how forward looking stock market players are, let us have a look at the relation between corporate profits and the S&P 500. You can get a clearer picture after both get expressed in in True Dollars™ to remove the effects of bankers' inflation, cash and checkable deposits accretion under a fiduciary monetary system.
As you can see, the trend in corporate profits foretells the S&P 500 rather than the S&P 500 foretelling the trend in corporate profits. Thus, stock market players are not "forward looking" at all. Rather, by the time bullish, long stock market players awaken to the current state of the economy, it is too late.
In True Dollars, corporate profits have been on the decline since the end of Q4 2010. True profits are down a blistering -41.1% since. So what has kept up stocks since Q3 2011? Well, quite likely, Janet Yellen and her Federal Reserve friends have been doing so.
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