Stock Market Detached From Real Economy
Think about this for a moment. The stock market is comprised of thousands of companies doing business in the economy. Therefore, it only makes sense that the value of the stock market should be a reflection of the economy. As the economy ebbs and flows, so should the values of the companies that are operating within it. This idea can be demonstrated by looking at the real, inflation-adjusted, price of the S&P 500 as a percentage of real GDP.
“One principle for sure would be to get out of anything that falls below the 200-day moving average. ”
That simple piece of advice would save investors an immense amount of heartache and wealth if they would only tune out the media and pay attention to the trend.