Unexpectedly Intriguing!
May 4, 2016

Just a visual reminder for anyone who has any confusion about what the fundamental driver of stock prices really is. The animation below shows the S&P 500's average monthly earnings per share, dividends per share and price per share in logarithmic scale since January 1950 in five second intervals before recycling....

Animation: Average Monthly S&P 500 Earnings per Share, Dividends per Share, and Price per Share, January 1950 through April 2016

There has been one notable exception to this fundamental relationship during all these years, which held between 7 May 1997 and 23 May 2003. That period of time is best known as the "Dot-Com Stock Market Bubble", which was caused by one change in the nation's tax laws, and repaired by another.

Oh, and the title of this post is the answer to CNN's Matt Egan's question from 22 April 2016: "What's propelling the stock market rebound?"

Data Source

Political Calculations. The S&P 500 At Your Fingertips. [Online application]. 6 December 2006. Last updated: 17 April 2016 (through March 2016).

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