Stock prices are lagging indicators? They fall after company profits fall? Hmmm, that’s news to me.
Actually, stock prices are a leading indicator. They tend to fall in anticipation of falling profits (and vice versa), as the market is forward looking. Although it’s true that they often continue to fall after the realization of such falling profits.
I can’t imagine where you would have read that stock prices were lagging indicators. You’ve got a very bad source there.
