#197 Is the stock market the economy?
Word on the Street
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Stock Market Value Captures All of Future Earnings
There's quite a stark disconnect between equity market performance and the economy. A company's stock market value captures all of future earnings, not just on one for one basis. Markets tend to actually price the direction of the economy at least a couple months in advance. So by the time you're hearing that a recession has arrived, you're often too late to do something about it as markets should have already priced that in.
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