There have been a lot of traditional economic indicators that have surprised us through the years, and some have deceived us and also left us with an overall, uneasy feeling most of these days. The 401k plans and the retirement plans are simply tracking like roller coasters.
The question is: Can we trust these increases in the stock market? The economic indicators show that the economy is slowly recovering from the recession, and we need not to fear but fear itself. In the indication of history, a surge in the stock market is not a sign or a measurement that our economy is moving up and out of the depths of a recession.
There are recent headline that indicate that stocks have climbed based on the information released on a jobless report that most employers are cutting fewer jobs. Can you say that this is the reason why stock market has surged?
The day ended in the stock market in its average again. Can we point to any historical indicators that show the stock market is a leading indicator? Are there any several factors that has caused the increase and decline of the stock market over the years? Again the U.S. dollar has lost its value against other foreign currencies. This is not a good indication of a healthy company.
From this point, these examples show that the stock market is not a great way to indicate the economic status of any country. Since it is only based on the countries business industry and not in other aspects of the countries economic status.
Another problem with trying to use the stock market as a leading indicator of the economy is that there are speculators in the market driving up the price. For several months now, the analyst’s have indicated the market has gone up to far, too fast. They have been saying it is due for a correction. The expected correction has not happened yet. The question is, is it going to happen or will people continue to buy shares and drive the price up for some time. Will the fall be harder because the correction comes later?