Thursday , 25 April 2024

Monthly Archives: November 2014

True or False: Wars Affect Performance of Stock Markets

It is common for economists to offer a forecast for the stock market yet add a caveat to the effect that "If a war shock or terrorist attack occurs, then I would have to modify my outlook." As such, it would seem logical to assume that...they must have access to a study showing that such events affect the stock market, right? The answer is no, for the same reason that they do not check relationships between interest rates, oil prices or the trade balance and the stock market. The causality just seems too sensible to doubt.

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True or False: Earnings Drive Stock Prices

The belief that earnings drive stock prices powers the bulk of the research on Wall Street but this glaring exception to the idea of a causal relationship between corporate earnings and stock prices challenges that theory. Let me explain.

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Will Lower Oil Prices Mean Even Higher Stock Markets?

Whenever oil prices make a big move in either direction, there are some fairly standard arguments made of its effect on the overall stock market but, rarely, is any actual evidence presented to substantiate these more or less intuitive arguments. Let’s take a look at the data and see what the historical relationship has actually been between oil and the stock market.

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