Does the stocks really represent our country or is it all one big scare linked to insurance companies and derivatives of this housing flop?
I do not think we are heading for the great depression 2. There were some big mistakes they made back then by raising interest rates, raising taxes, and cutting spending.
They learned to not do that with Keynesian economics. There was a risk of a Depression if things were allowed to collapse. We have backed off the brink but there is still some big risks out there.
Do stocks represent the country? You mean the economy? Sorta. I will say it does represent the current ATTITUDE about business and future profits. So some is the result of the reality, the fundamentals, but some is the result of the perception of the same and fear and greed. But the stock market does tend to overreact.
And it is the over reaction in either direction from which I profit most.