Politicians are always quick to take credit when stock market raise, and they’re quick to blame opponents when they fall, but these are based on complicated calculations, which, recently, have lead to abnormalities based on wide fluctuation in one or other product and service (oil and housing come to mind).
So are stock indexes as reliable as they used to be in determining the health of an economy? How significant are they really?
Investors try to predict the future profits of companies which depend on the economy and since they have money on the line they do a pretty good job. However this is not the same as determining the health of an economy any more the a weather forecaster determines the weather.