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Reply #66: Maybe it was your wording [View All]

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ozone_man Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Sep-10-07 12:40 PM
Response to Reply #63
66. Maybe it was your wording
"the stock exchange is the LAST place where the economic instablity shows up" I was reacting to.

Here's a description of a more typical view that the stock market is a leading indicator of the economy and recession. I think what most people call the economy may not apply to certain fundamentals weakening early on. But as we know, the stock market doesn't always move according to fundamentals. Lot's of psychology in that process.

Leading: Leading economic indicators are indicators which change before the economy changes. Stock market returns are a leading indicator, as the stock market usually begins to decline before the economy declines and they improve before the economy begins to pull out of a recession. Leading economic indicators are the most important type for investors as they help predict what the economy will be like in the future.

http://economics.about.com/cs/businesscycles/a/economic...

As far as I know, a recession has not been declared and probably won't for several months. And then there is the election year coming up. How will that affect the economy? I'm sure they will try to prime the economy and stock market one more time by lowering rates, but after the election the bottom will fall out. Maybe before even.
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