Poway, stock prices are a leading indicator. Period. If you are convinced otherwise, don’t hestitate to contact the economists at The Conference Board, which handles the Consumer Confidence Index and the Index of Leading Economic Indicators, as they have classified stock prices as a “Leading Indicator.” I’m sure your insights will be given the consideration they deserve.
Regarding H&R Block, if you look at the company’s chart what you’ll see is that the stock had fallen (in fits and starts) from $27-ish to $23-ish over the year prior to its most recent announcement. What does this tell me? The market was anticipating bad news – which was reflected in the stock’s falling price – but the recent news was just worse than the market expected. So, the price was still forward-looking in nature, but the market underanticipated the degree of the bad news. “Forward-looking” does not mean “omniscient.” What the market appears to be discounting at any given time may turn out to be just plain wrong. But that doesn’t mean that, on average, stock prices are a not a leading indicator, anecdotes notwithstanding.
