Where does this value in the stock market really come from? Yes globalization, emerging markets, world trade, serivce and tech industry growth have added to this. But at the end of the day, it all ultimately relies on consumers spending money. The only true abillity of that, income, has not grown this much. Can world consumption have grown this much since 1980 or 1990?
Look at this 80+ history of the DOW.
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Stocks go up primarily due to EPS, which is the result of good company performance. Credit availbility has increased consumption, but that’s the point. How much of the stock market growth is based on debt, and at what point will people no longer be able to spend money they don’t have?
Seeing this chart I can’t help but wonder, are we right in the middle of one massive speculative stock bubble? Maybe not to the level of the late 20’s, but what is this “growth” really based on? Is it realistic, and more importantly is it sustainable?
