Friday, 23 December 2016

The Market as a Leading Indicator

Investors use the economic outlook

  • to get a handle on the market and 
  • to identify developing industry sectors.

It is important to note that changes in stock prices 

  • normally occur before the actual forecasted changes become apparent in the economy.

Indeed, the current trend of stock prices 

  • is frequently used to help predict the course of the economy itself.

Investors in the stock market tend to look into the future to justify the purchase or sale of stock.

If their perception of the future is changing, stock prices are also likely to be changing.

Therefore, watching the course of stock prices as well as the course of the general economy can make for more accurate investment forecasting.

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