Terrific article. I've long been annoyed by how many investors seem to believe that stock returns are directly linked with earnings growth and/or GDP growth. It's just not the case. For one thing, it's quite possible for a company with flat or falling earnings to pay a healthy dividend, which of course will contribute to the total return. But more importantly (and as this article demonstrates), the link between stock prices and earnings is weak and often takes a very long time to reveal itself. If earnings jump 50% over some time period, that tells you very little about what will happen to the stock's price.

For those that are still skeptical, I encourage you to download Shiller's data and try it for yourself in Excel. I found it very enlightening !