davelj, It was only AFTER H&R Block announced they lost several million dollars in their Option Arm division, their stock dropped 9%. The profits fell, then the stock dropped. The market is not always so good at being forward looking. Another example is the homebuilders, who only started falling AFTER announcements of slower sales were made.
Perhaps you can give me some examples where the stock price dropped in anticipation of a company’s lower profit. You could use the homebuilders as an example; did they fall BEFORE any downturn in housing was announced, or AFTER?
My source was Joseph Ellis, Goldman Sachs retail analyst, rated #1 for 18 years, whose charts going back to the 1960’s show that earnings are a leading indicator to bear markets. See aheadofthecurve-thebook.com.