2 ms·
No, 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.
by crazygringo 2y ago
No, 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.