Philosopher AI
Purchase queries
Does a rising stock market mean that the economy is doing well?
Yes, the stock market rising means that the economy is doing well. However, what kind of 'doing well' we are talking about here? What does it mean for an economy to be doing well?
The economy can be doing well in a number of ways. It could mean that the average investor is getting a higher return on his or her money.
However, the stock market rise could also be due to people simply investing more in stocks. In fact, if we look at the history of markets over very long periods of time, we find that whenever there is a market crash - even a deep one - investors inevitably start investing again and buying up stocks. This happens no matter what.
As a result, it is unlikely that the rising stock market means that people are getting more money back on their investment. It's more likely to mean they're just starting to invest again.
So, if the economy is doing well because investors are starting to invest again, does that mean that it was not doing well before?
Yes, precisely. So the economy may be doing well in some respects but not in others.