As I ponder, "The Economy" the above quote comes to mind. If memory serves, almost half of all voters vote The Economy; and certainly many make decisions based on how it affects their pocketbook. But, what exactly is "The Economy" to most people? Those with a degree in Economics, Finance, and even an average day-trader will have a pretty good understanding of The Economy is, but what do most think? - Is it simply the DJIA? Trump seems to love the Dow; apparently because the DJIA to many is the most informative snapshot of the economy out there. What irks is that many do not even understand how the DJIA is calculated, weighted, and (*cough*) manipulated. - Is it the S&P 500? This is arguably a better indicator, as it captures performance of about 500 U.S. companies. What about the rest of the world, and how it affects The Economy? Granted, many in the U.S. don't give two sticks about the rest of the world, but as a measure of The Economy it probably shouldn't be ignored. - FTSE and other foreign indexes? How about commodities as a measure of The Economy? - Gold price? - Oil prices? As a relatively seasoned trader, perhaps I'm already beyond the average Jane/Joe. Do normal people think about monetary policy on a daily basis? Speaking of monetary policy, is the Fed basically in charge of how the Economy is doing? Perhaps I need to reel it back, and look at The Economy, from a self-centered perspective; a me perspective: - How easily is it for me to find a job? - How much do I get paid? - What is the minimum wage? - How is my 401k doing? - What kind of car can I afford? - What kind of home can I afford? - How much does a pint of beer cost? - How much does a gallon of gas cost? - How much does a pint of milk cost? Would the above add up to the Consumer Price Index? In sum, I'm trying to understand exactly what "The Economy" means to the ordinary man or woman. Thoughts? Maybe I need to ask around. Would you think that it's too nutty to approach random people and ask them, "What does `The Economy` mean to you?
I think to most people ECONOMY is an individual thing. How well/bad they are doing in relation to others or to their past. Its independent of GDP, OIL, etc. Keep in mind that most people live paycheck to paycheck without so much of a worry of how the Dow/s&p is doing as they have zero invested.
In the most simplest term possible: The "Economy" is a measure of how well one can consistently pay for their spending habits. Financial indexes are not the economy, they are more or less futures on economic conditions 6 month to 12 months forward based on their inherent discounting mechanism. There can be significant deviations between the spot economy and the financial markets. This is why euphoria always precedes fear, and despair always precedes optimism.
In the good times people generally get treated better at work as management know it takes longer to find a decent replacement. The are more overtime opportunities and even pay rises. Everyone feels they have more opportunities available to them even if they never take them. In the bad times. Things flip. Now the employee is scared of being laid off. And there are plenty of decent replacements on the job market so employers care less about how employees feel. No pay rises. Layoffs for the unluckly and increased work load for those not laid off. Things change from being an employees job market to an employers job market. And people can feel that in terms of anxiety and stress levels everyday at work.
First thing we can talk about is that almost nobody actually invests now. Private ownership is dead. Long live the HFTs. Also, its all based upon CB games, not whether a company is making money, as in the stock market.
Just retirement investments are worth about 25 trillion so somebody out there is investing. Maybe it's just you who missed the boat?
Yeah....well that is all the oldies. The millenials aren't invested. The Gen x ers aren't either. I didn't miss shit, I am a trader, so I don't go that route. If I wanted an index fund - I would just buy it. Exactly HOW MUCH of the liquidty and transactions everyday in the stock market is HFT???? Not exactly CALPERS, which of course isn't properly funded, like the others.