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How far ahead of the economy is the stock market?

Bob Smith asked:


I’ve heard the stock market is an indicator of future economics. We’ve seen a little improvement in the market recently, indicating economic recovery, but when? Also, why does the stock market say it likes Hillary Clinton as VP?

Basically, I’m interested what messages the stock market sends in general.

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This entry was posted on Thursday, August 21st, 2008 at 1:18 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

2 Responses to “How far ahead of the economy is the stock market?”

  1. Ken D Says:
    August 23rd, 2008 at 11:00 pm

    The rule of thumb is the market is about six months ahead of the economy so when the market starts a sustainable rise the economy should follow in six months.

  2. eaglesonaperch Says:
    August 26th, 2008 at 5:36 pm

    At this point it is pricing in the rebate checks and will soon be looking at the Christmas shopping season and the new President.

    so yes, about 6 months ahead.

    This is where it looks tricky,imo….
    Will the stock market like the next President? If it’s projecting Obama, the stock market may soon fall because the taxes will increase and some protectionism will surface…If the stock market thinks McCain will win, the market will probably scream higher from here…..tough call.