Interest rates, oil prices, earnings, GDP, wars, terrorist attacks, inflation, monetary policy, etc. -- NONE have a reliable effect on the stock market
By Elliott Wave International
You may remember that during the 2008-2009 financial crisis, many called into question traditional economic models.
Why did the traditional financial models fail? And more importantly, will they warn us of a new approaching doomsday, should there be one?
This series gives you a well-researched answer.
Here is Part V; come back soon for Part VI.
Myth #5: "GDP drives stock prices."
By Robert Prechter (excerpted from the monthly Elliott Wave Theorist; published since 1979)
Surely the stock market reflects the nation's Gross Domestic Product. The aggregate success of corporations shows up as changes in GDP. Stocks are shares in corporations. How could their prices not reflect the ebb and flow of GDP?
Suppose that you had perfect foreknowledge that over the next 3 3/4 years GDP would be positive every single quarter and that one of those quarters would surprise economists in being the strongest quarterly rise in a half-century span. Would you buy stocks? [Read more...]