The Stock Market Is Not the Economy

Money For the Rest of Us

J. David Stein

Investing, Investing Podcast, Business, Economics, Economy

4.5 • 1.4K Ratings

🗓️ 13 May 2020

⏱️ 30 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

How the stock market differs from and can perform differently than the economy while remaining highly dependent on the economy for its success.

Topics covered include:

Why the stock markets in countries with lower economic growth performed better than the stock markets in countries with higher economic growth.
How the top 5 stocks in the S&P 500 Index have the largest weighting in 30 years and what will it takes for these stocks to outperform the market.
What are the largest contributors to U.S economic growth, most of which are not publicly traded.
How the U.S. government and the Federal Reserve saved the stock market.
How have stocks performed during economic recessions.
Why it is risky for investors to be dependent on the financial prospects of the largest technology stocks.

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Transcript

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0:00.0	Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to invest it, how to live without worrying about it.
0:10.0	I'm your host David Stein today's episode 298 is titled The
0:15.6	Stock Market is not the economy, but it sure depends on it. The top five companies in the S&P 500 index, this is a measure of U.S. large company stocks,
0:30.0	are Microsoft, Apple, Amazon, Facebook, and Alphabet, which is the parent company to Google.
0:39.0	Those five stocks comprise 20.4% of the index, the highest level in 30 years. Their
0:48.6	performance through April for those five companies is they gained 10%. This in the phase of the worst global
0:59.3	pandemic since 1918. The other 495 stocks within the S&P 500 are down 13% year to date through April.
1:11.0	This is data according to Goldman Sachs.
1:15.7	Eric Levitz in the New York magazine wrote, and it's a little bit satirical. A growing number
1:22.3	of Wall Street investors and analysts have made peace with the dissidents
1:26.6	between the market's fortunes and their own.
1:29.5	In their view, capitalists haven't lost touch with reality. Equity values simply no longer depend on the functioning
1:36.4	of society. The market isn't the economy. Capitalists don't need it to be safe for you to leave
1:42.4	your house or possible for 30 million unemployed Americans to find jobs in order to make healthy profits.
1:50.0	The next Industrial Revolution will be live streamed.
1:53.2	Come on in the S&P 500s.
1:55.4	Fine.
1:57.3	Sarah Ponsack wrote in Bloomberg.
2:00.4	The market isn't the economy.
2:02.4	Though it's at least a reflection of it, and a bet on what will thrive in the future.
2:08.0	Unsurprisingly, amid a crisis bent on keeping everyone at home, bets are coalescing around companies that ease the burden of being locked indoors.
2:17.0	She quoted Jack Janassio Wiss, a portfolio strategist at Natixis Investment investment managers, they oversee a trillion dollars
	...

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