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sure, I'm not saying the market is a perfect indicator of the economy's trajectory. I'm pushing back on the idea that it's completely disconnected from the econ
by leetcrew 6y ago
sure, I'm not saying the market is a perfect indicator of the economy's trajectory. I'm pushing back on the idea that it's completely disconnected from the economy, or at least that pointing to current unemployment figures and an S&P all time high is not enough to prove the point.
- mywittyname 6y agoThe S&P 500 is absolutely disconnected from "the economy." Out of the top 5 stocks on the S&P, 4 are tech companies employing fewer than 1 million Americans combined. Expanding that list to the top 10 companies, P&G and Visa are kind of representative of the economy, but they are highly consumer focused. Leaving Berkshire Hathaway as the sole stock in the top 10 that is representative of the American economy as a whole by virtue of doing business in such a diverse collection of markets and owning many small, private businesses. Another problem with the S&P500 is that it is capitalization-weighted. So even if it contains a diverse set of companies, technology stocks are over-represented because of how well they scale. Walmart has to do a hell of a lot more work per dollar of profits than Apple does.