Opinion: Beating the market would still be tough even if you knew the S&P 500’s earnings before everyone else

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Would you like to have advance knowledge of what the S&P 500’s earnings per share will be for the quarter ending Dec. 31? Of course you would.

With such foresight you’d have a big jump on the rest of the market. It will be February 2022 before we know what the S&P 500’s
SPX,
-0.69%

EPS will be for the fourth quarter. We still don’t yet know what the S&P 500’s EPS were for 2021’s third quarter.

In fact, though, according to a study I conducted of the S&P 500 since 1871, such advance knowledge would have done you little good. It’s not clear that it would have enabled you to beat a simple S&P 500 index fund.

The reason I conducted the study was to provide a reality check on a recent narrative that is gaining traction: the stock market won’t suffer a major decline so long as the U.S. economy and the S&P 500’s earnings per share are growing.

This certainly is a convenient…

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