The stock market leads the economy, not the other way around
By Elliott Wave International
It’s a wonderful thing when jobs are added to the U.S. economy.
But, as far as investing goes, history shows that you should not bet your stock market portfolio on it. Conversely, even a series of weak jobs reports doesn’t mean you should bet against stocks.
This is worth mentioning because many pundits believe big economic factors like jobs determine the stock market’s trend.
Consider this from CNN Money:
Solid corporate earnings coupled with continued demand for new technology bode well for the major U.S. stock indexes. So do expectations of a buoyant economy at home and a recovering one overseas. [emphasis added]
When do you think this article was published?
Well, it’s hard to tell because the narrative could fit different timeframes in recent history. Plus, correlating strong earnings and the economy with gains in stocks is all too common.
That article was published on Dec. 31, 1999 — just two weeks before the DJIA hit a milestone high and then went on to shed nearly 40% of its value through October 2002. [Read more…] about Here’s Why “Strong Jobs” Don’t Mean “Higher Stocks”