Stocks are just mirroring the general state of the economy. When I grew up, my mental frame of the global wealth had the U.S. on the same tier as most Western European nations. Maybe a little ahead, but not comparable to tax havens such as Luxembourg or Switzerland. Now the U.S. is almost as rich as these two nations and is probably going to overtake them, while most of Western Europe is standing still, with scarce hopes of recovery given its bad demography.
In the Nineties and Aughts, Europe managed to keep pace with the U.S. and even reduce its gap, till the 2008 financial crisis. But since then the two zones are on totally different paths.
I can't hear the stock price or GDP per capita difference over the sound of my one month yearly vacations and half year parental leave and free health care and excellent public transportation and walkable and safe cities.
Stocks don't mirror the general state of the economy, at all, stocks are just another market. Look at how stocks performed during 2020-2021, where economies were struggling because people couldn't work (or in many places not even leave their houses/blocks for months at a time), the stock market follows feeling and confidence and not the economy necessarily.
Can it be a proxy to study the underlying economies? Probably, but it's never the economy.
Stocks are just mirroring the general state of the economy. When I grew up, my mental frame of the global wealth had the U.S. on the same tier as most Western European nations. Maybe a little ahead, but not comparable to tax havens such as Luxembourg or Switzerland. Now the U.S. is almost as rich as these two nations and is probably going to overtake them, while most of Western Europe is standing still, with scarce hopes of recovery given its bad demography.
In the Nineties and Aughts, Europe managed to keep pace with the U.S. and even reduce its gap, till the 2008 financial crisis. But since then the two zones are on totally different paths.
I can't hear the stock price or GDP per capita difference over the sound of my one month yearly vacations and half year parental leave and free health care and excellent public transportation and walkable and safe cities.
Stocks don't mirror the general state of the economy, at all, stocks are just another market. Look at how stocks performed during 2020-2021, where economies were struggling because people couldn't work (or in many places not even leave their houses/blocks for months at a time), the stock market follows feeling and confidence and not the economy necessarily.
Can it be a proxy to study the underlying economies? Probably, but it's never the economy.
https://archive.is/gpCmC