Posted Feb 21, 2016 by Martin Armstrong
QUESTION: Hi Martin !
In a globalized interconnected world where we see stock markets falling 30% and more from their recent high entering bear market territory how can it be that the S&P 500 is losing ground far less? Especially considering key economic data like the ISM that reveals a rather negative view on the U.S economy.
ANSWER: Even if the economy declines, does that mean you rush and buy government debt? Your question assumes stocks only rise with rising corporate profits based upon the domestic economy. That is so untrue that it is laughable. There are two reasons: corporate will make more from overseas than domestic, but more importantly, if government is the one in trouble, capital will park in equities just to preserve itself. Your line of thinking will cost you everything you own. Markets and economies do not function in that one-sided manner.
Tags: basic concepts