Why Investors Should Ignore the Market Drop and Focus on Earnings
The Nasdaq dropped 3% last week, its sharpest fall since the Trump tariff shock. The Wall Street Journal is calling it "The Week the AI Boom Got a Reality Check on Wall Street."
Peter Lynch, however, would advise investors to stay calm:
What the stock price does today, tomorrow, or next week is only a distraction. Instead, if you can follow only one bit of data, follow the earnings. I subscribe to the crusty notion that sooner or later earnings make or break an investment in equities.
— Peter Lynch
This Lynch quote comes from his 2012 bestseller, One Up On Wall Street.
What Really Drives Growth
On any given day, week, or month, the market will be volatile. But ultimately, Lynch believes, a company's share price will move in line with its earnings.
And when it comes to earnings, the big AI companies are delivering. Google parent Alphabet reported more than $100 billion in revenue in the third quarter, its best such result ever. Earnings per share jumped by 35%.
We can look at how the great Oracles of Finance might use numbers like these to decide what a company like Alphabet is worth, but I'll save that for another note.
Today, let's trust Peter Lynch that, however dramatic, weekly market news means little. It's earnings that create wealth.
✦ My Daily Oracle is published every weekday. Watch for your next issue in your inbox.
Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Please consult a qualified financial advisor before making any investment decisions. Links on this page may be affiliate links, meaning your purchases help support this newsletter. Quotes may be edited slightly for clarity. Images represent our best effort. Copyright © 2025 mydailyoracle.com. All rights reserved.
No spam, no sharing to third party. Only you and me.
