The Dow is racing towards 30k as we speak. Can I still get in on that 4:1?

 

And the Nasdaq hit a record today..

 

Repeat after me:

The stock market is not the economy.
The stock market is not the economy.
The stock market is not the economy.

Equating the two is one of the most popular misconceptions out there.

 

LOL, yea, his post didn't age well at all...some of the comments on this thread are just bizarre...

 

Technically, you're correct. However, it is a tremendous indication of how well the economy is doing - as it represents how well the economy's publicly traded companies are doing and how well investors think they're going to do in the future - both short and long term. Generally speaking, you'll not find a strong stock market with a weak economy, or a down stock market with a strong economy - with a few notable exceptions.

 

Generally....yes. But in this instance 2 tr in money printing has pumped it up....not good fundamentals.

 

True indeed. And we are all seeing one of the most notable exceptions right now...

The problem here is that the general public equates the stock market with the economy, and uses it to make all sorts of completely unsupported conclusions. (I.e. "the Dow's up! See, the economy's doing great! It's all due to [name of current President in power]!!")

Trouble is:
1. Only slightly more than 50% of US households own stock, either directly or through retirement funds such as 401(K)s, annuities, pension plans, etc. We'll ignore the fact that stock ownership is heavily concentrated amongst the wealthy (no matter how much my fellow blue-staters may squawk about that.) But the point is, if only half of the population is invested in the market, it cannot really be equated to the economy -- which defines the economic output of the entire population.

2. Publicly-traded companies account for less than one percent of all US firms, and account for only one-third of all non-farm US employment. See the Forbes article (hardly a publication known for a left-wing slant.)

3. US market capitalization was $37 trillion at the end of 2019. Of that, the top 10 companies accounted for $7.3T of that, or fully 20%.

So when you consider that 1) only half of Americans own equities in any shape or form, 2) less than 1% of all US companies are publicly traded, and account for less than 1/3 of US employment, and 3) of the companies that are public, the top 10 account for 20% of the market's value...

...it becomes apparent that 'the market's" value to investors is simply their projections of future profits of a very small subset of US employers.

 

Call me silly, but I watch on You Tube a rr station in MO. it is on the route between Chicago and L.A. AmTrak has been empty but the freight trains are gangbusters as many as 175 cars. Only time you will see FedEx, Brown and Amazon roll-ons together. That, I think, is the economy.

 

The stock market is no better than an emotional goth teenage girl.
High and happy today and down and depressed tomorrow

 

Ain't that the truth!

Except the goth chicks were cute. Well, most of 'em.