As an investor, to earn superior investment returns, you must correctly
anticipate the stock market’s expectations revisions. But before you can
consider the likelihood and magnitude of expectations revisions, you
need to clearly understand where expectations stand today.
Ask an average group of investors if they are interested in reading
market expectations, and you’ll hear a resounding yes. But if you ask
them how they go about reading the market, they’ll probably fall back
on a slew of contemporaneous, statistical benchmarks like short-term
earnings and price-earnings multiples. Though ubiquitous, these
investment shorthands aren’t reliably link