This chart over laid by the SP500 performance should be standard review in any finance class. Profits peaked back around 1998, but the stock market soared into 2000. On the contrast, profits continue to soar heading to nearly double that of 1998 levels yet the market is still struggling to obtain a faction of the stock prices in 2000.
This should undoubtedly prove to any investor that the market is based solely on future profit potential and momentum. Never pay attention to anybody discussing the trailing PE. Utterly useless! Every corporate indicator alone would suggest a booming stock market reaching record highs, but the market struggles some 25% below the 2000 and 2007 peaks.
It should also be a warning to those down on the market currently. When market momentum turns, the market has the potential for a massive rally. Naturally it will unlikely reach the unreasonable multiples and valuations of the internet bubble, but upside potential is far beyond what most market procrastinators believe based on earnings solely. Just a matter of momentum returning to normal levels.