Introduction | 2min snip from Money For the Rest of Us

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Dissecting Stock Returns: Financial Engineering or Genuine Growth?

Money For the Rest of Us

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CHAPTER

Introduction

Exploring the impact of financialized growth on stock returns, referencing articles by Rana Faruhar and Michael Smoyansky. Focus on the S&P 500 index growth from 1989 to 2019.

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Episode notes

Do the impressive returns in public and private markets stem from strategic financial engineering or reflect actual economic growth?

How corporate profit growth is linked to economic growth, even though corporate profits are more volatile
How interest rates, tax rates, and stock buybacks influence corporate profits and stock returns
Why there are fewer publicly traded stocks
How the increase in leveraged buyouts has impacted the economy
How private equity funds use financial engineering to boost returns

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Show Notes

US CEOs start to contemplate Trump, round 2 by Rana Foroohar—The Financial Times

End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns by Michael Smolyansky—The Federal Reserve

10-Year Stock Market Returns—Crestmont Research