The S&P 500 is currently trading at almost 800 points, or an incredible 30% above the March 23 minimum, and there are differences of opinion on whether it is a new bull market or just short-term growth before a massive trillion-backed slump. In terms of liquidity and fiscal stimulus of the central bank, it has never been higher.
Since 1947, earnings per share have risen to 6.21% per year, while the economy has grown by 6.47% per year. This close relationship between growth rates should be logical, especially given the 70% share of consumer spending in GDP by the US equation.
Although current stock prices may deviate from immediate activity, real economic growth will eventually be reversed. This is because corporate profits are a function of consumer spending, corporate investment, imports and exports. In 2000 and again in 2008, when economic growth slowed, companies’ profits fell by 54% and 54%, respectively. 88%. In the short term, the stock market often separates itself from basic economic activity because the psychology of investors comes to the belief that “this time is different.”
There is only one truth in stock markets: “The stock market is NOT an economy. However, the economy is a reflection of what supports asset prices – corporate profits. “Lance Roberts.
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