Uncertainty and Forecasting in the Marketplace
No one knows what the earnings of a company (except perhaps an electric or gas company or, to a lesser degree, a bank) will be several years hence.
Even if the investor knew the earnings results several years off, he would not even then know at what price the stock would sell because: common stock valuation almost always can differ by between 12 to 15 percent; much larger differences in valuation result from changes in the market valuation of a dollar of earnings.
If large and small investors were persuaded of the foregoing, much disappointment would be eliminated and less confidence would be expressed in the future price movements of stocks.
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