Seven years into this bull market, how is it that equities continue to rally? I share investors' scepticism, but not because of the duration of the bull market or the size of the rally. I struggle to find reasons to be bullish on the two fundamental drivers of equities: earnings and valuations.
Given how often ‘consensus earnings expectations’ are quoted in the financial press and feature in investor discussions there is surprisingly little awareness of what consensus really is. What does it really measure? Who contributes to it? What are its biases?