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How much money is flowing into any businesses that matter? I don't imagine shoving more money into the S&P is having that much of an effect on 'the economy'
by errantmind 5y ago
How much money is flowing into any businesses that matter? I don't imagine shoving more money into the S&P is having that much of an effect on 'the economy'
- reducesuffering 5y agoIt's a good question, but we must consider downstream effects. When one buys SP500, it pushes up the price in price/earnings for those companies, making them slightly less attractive investments and therefore other small companies slightly better investments. When, residually, some of that money flows to increasing the price of a struggling $1b company (efficient market hypothesis), they're now able to be capitalized better in investing in a second factory, or affording their debt as to not go bankrupt and have further knock-on economic effects.