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Monday, May 22, 2017

The Inmates Are Trying Again To Take Over The Asylum

There's a rather hysterical article about the stock market sitting on the Yahoo Finance site as I write this.  It is written by a reporter who cannot understand why the stock market hasn't tanked given all the supposed bad news and controversy surrounding President Trump.  You can hear the disappointment in the reporters prose as she laments the failure of the stock market to collapse in panic.

Let's stop there for a moment.  Does it really make sense that a supposed financial reporter is rooting for a market collapse?  What kind of a moron is that?

But let's continue because the report gets worse.  After the lamentations about non-collapse, the reporter identifies the culprit that is holding up the market:  stellar earnings growth.  In other words, the public companies listed on the exchanges are making more money now than they did last year when Obama was in office.  This outcome (which the reporter must view as some sort of weird coincidence) is screwing up the market collapse that the reporter so clearly wants.

That's enough of the drivel from the reporter.  She has made very clear that she doesn't have a clue how markets work.  There is only one thing that drives the stock market: the desire to make money.  A wonderful company that does all sorts of good deeds will see its stock collapse if it proves unable to make a profit.  Even companies whose stock prices soar before they make much money do so because investors are betting that the company will shortly start cranking out cash.  Political turmoil doesn't drive the market.  Sometimes political turmoil raises the possibility that disruption will lower future earnings, and that can cause a down trend.

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