TAKE THE POLL: CLICK HERE
Forbes published an article in January 2024 detailing the key differences between the stock market and the economy, and why they were on such different pages at the time.
Most people think the terms “stock market” and “economy” mean the same thing and are interchangeable, but this is actually untrue. That’s why when we see the stock market rising, the economy doesn’t necessarily feel … great. (TAKE A POLL: Are You Concerned About the National Debt and Its Implications For Future Generations?)
“These assumptions are not only incorrect, but history shows that often it’s the inverse that occurs. This means that strong stock markets mask weak economies, while strong economic growth has been obscured by weak stock markets,” wrote Ivan Illan.
Basic Economic Data Is Hidden
Illan writes that “investors cannot deduce anything (with very high confidence) about future stock prices using basic economic data such as GDP and money supply.” But since this is so readily available, most novice investors can sometimes be led down the wrong road. (TAKE A POLL: What Is the Most Pressing Political Issue Facing Our Country Today?)
“It’s most prudent to try to ignore the news about changing conditions and focus more on the fundamentals associated with broader industry trends related to profit margin expansion or capital flows related to business investments,” he concludes.
But, what does this mean? Well, Illan thinks that the stock market is NOT an accurate reflection of the economy. Did you think it was before reading this review? Tell us today!
How Do You Feel?
Take action by using your voice today. Sign up to take a poll!