It's been said that the stock market leads the economy by as much as 6 months, if not more. Considering that the current market shot up more than 60% since March of this year, it's safe to conclude that the market must have known 6 months ago that the overall economy would improve in six months time (which is now). But is the main street any better now than 6 months ago? Here's another example. The stock market fell off the cliff in July 2007 when the subprime bubble popped. But this event did not surface overnight. There was numerous evidence coming from the main street that suggested the trouble had already begun. Even the stocks of home construction companies were under water long before the general stock market came to a screeching halt. Does the stock market truly lead the economy by 6 months as the textbook hacks would suggest? Which is the true laggard of the two in your opinion?
The stock market doesn't lead anything... The market is just a place where prices goes up and down... and we all know these prices can be easily manipulated.. The economy is bad and the market is rising like crazy.. no way this market leads the economy by 6 months..