70. Does the stock market follow the economy?

There are a lot of debate as to whether the stock market is reflective of economic developments, some says it does, while others say it don't

In the last two years of the pandemic, the stock market as measured by the PHISIX seems to show a direct correlation between the general economy and stock market levels

A lockdown, quarantine or any restrictions on mobility has an adverse impact on businesses in general, it lowers the volume of business transactions leading to tighter margins for listed companies, GDP for the second quarter of 2020 dropped by more than 16% as a result

The slowing down of the transmission of the virus, vaccination programs of the government or any policy decisions leading to more relaxed restrictions is seen as positive for businesses hence the market reacted positively

while the debate goes on, it helps to keep an open mind and continue learning

all the best my friends!

#acgadvice