The recent stock market highs during the past few months have many folks confused.
“How is it,” they ask, “that stocks are performing well, while the economy falters?” This is a good question that merits an answer.
The Wall Street numbers that we hear on the news are an index of the minute-to-minute assessment of buyers and sellers, half of whom think prices are too high while the other half think them too low.
Almost all the news analysis as to the whys and wherefores of the stock market indices are piffle. The best prediction of stock prices today is yesterday’s price and one of the day-to-day changes of the past chosen at random.
The only information content that can be gleaned from stock prices is the expectation of short-run profitability of businesses traded on the exchange.
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