There is no historical correlation between economic growth and share price performances

There is no historical correlation between economic growth and share price performances. In fact, more often than not, it's quite the opposite. Negative economic performances often provide cheap share prices and thus undervalued buying opportunities.? Some analysts put this lack of correlation down to the fact that equities always try to forecast the next stage in the economic cycle and this means that this year's economic resurrection has already been priced in during the uninterrupted rally of 2013. Any investor buying today because the US economy, and its global impact, are looking forward towards a better performance this year is at least six months late to the party. ?This also explains as to why there have been so few noticeable pull backs since mid-2012. The global rally in equities has been all about improving investor sentiment and very little about growth in shareholder profits, at least outside the US.


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