Lee Munson, co-founder and chief investment officer of Portfolio Wealth Advisors, investigates GDP.
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A lot of investors think the GDP—Gross Domestic Product–will tell them how well the stock market is going to perform in the future. For instance, the lower the GDP, the stock market will do worse; the higher the GDP, the stock market will do better.
In fact, Lee discovered that NO, a lower or higher GDP doesn’t give us any information about what the stock market is going to do in future!
Lee Munson’s friends at Dimensional got their spreadsheets out and examined and compared 68 years’ worth of data. For each quarter since 1948, they compared the GDP to the S&P 500’s performance. Guess what, there was virtually no relationship.
So let’s all STOP using the GDP as any type of indicator—it gives us no information about what the stock market is going to do going forward.
Watch the video here for more information:
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