4 ms·
Shouldn't those things increase GDP as well?
by remexre 2y ago
Shouldn't those things increase GDP as well?
- crazygringo 2y agoNo, that's the whole point. They don't increase current GDP. Valuation of stocks is based on future expected profitability, while GDP is today's GDP.
- remexre 2y agoThat's still based on optimism (i.e., needs to be adjusted for risk), though; if the technology will massively increase productivity, the ratio should correct once those benefits start to be realized. It seems like "many market participants are mis-estimating risk" is exactly the sort of thing that this metric is intended to measure.