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One of the most common questions investors ask is why a great company can report strong earnings and still see its stock price fall sharply. The answer often comes down to one word: expectations.
Over the long run, earnings growth is the primary driver of a company's stock price. However, in the short run, changes in investors' expectations about future growth can have an even greater impact. Understanding this relationship helps explain why some of the market's fastest growing companies can also be among its most volatile.
