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The stock market and the economy have never really been converged though. Stock prices are based on nothing more than the supply and demand of the stock itself

The stock market and the economy have never really been converged though. Stock prices are based on nothing more than the supply and demand of the stock itself. That supply and demand has nothing to do with how well a company is actually doing. It usually tracks company performance but if everyone wanted to buy the stock of a bankrupt company, the stocks value would still rise. It’s all an illusion and it never had anything to do with the economy which is actually just the aggregate confidence of consumers and businesses in the future.

ntsplnkv2 6y ago
> That supply and demand has nothing to do with how well a company is actually doing. Companies that are more profitable have higher value stock - increasing the demand for it, no?
- andreilys 6y ago
  Profitability is one part of the calculation, but there are plenty of unprofitable companies with higher stock valuations because of expected growth/investor sentiment
  - ntsplnkv2 6y ago
    Future profitability is still profitability. That increases demand.
boring_twenties 6y ago
> but if everyone wanted to buy the stock of a bankrupt company, the stocks value would still rise. Case in point: https://news.ycombinator.com/item?id=23529088 https://news.ycombinator.com/item?id=23529088
deleted 6y ago
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