Does the Stock Market Know Something We Don't?
17 days ago
- #stock-market
- #investing
- #economy
- The stock market has grown significantly despite economic challenges like the pandemic, inflation, and high interest rates.
- Traditional theories like 'fundamentals' and 'liquidity' have failed to fully explain the market's recent performance.
- The 'Magnificent Seven' tech companies (Apple, Amazon, Alphabet, Meta, Microsoft, Tesla, Nvidia) drove over half of the S&P 500's growth in 2023-2024.
- AI optimism has fueled speculation, with some experts warning of a bubble similar to the dot-com era.
- Trump's tariff policies caused temporary market dips, but investors now expect him to avoid drastic measures that harm stocks ('TACO trade').
- The rise of passive investing (e.g., index funds) may explain the market's resilience, as it creates constant demand for stocks regardless of fundamentals.
- Passive investing could also be driving market concentration in a few large companies, like the Magnificent Seven.