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The S&P 500 Index and the TSX Composite Index of stocks are up respectively 9.5% and 6.2% in 2024. While it isn’t a raging bull market, those are still solid returns for stocks. It has been a solid and unexpected recovery after 2023 was a lacklustre year for stocks.
Certainly, what happens in the broader market affects individual stocks. However, when you buy stocks in high-quality businesses, it matters less. A stock follows the earnings and free cash flow per share growth of its company.
Forget about the market when you buy quality compounding stocks
Stocks fluctuate above and below the intrinsic value of a company. Yet, over long periods of time (like five years or more), a stock’s trajectory follows its earnings/free cash flow growth.
The broader market or index just doesn’t matter. What matters is that a company can consistently sustain strong and predictable earnings growth.
To do this, it…
