What’s Moving Stock Markets These Days
I haven’t written about the market in a while because whenever I start to I realize I’m writing the same story again. But every now and then I do think it’s worth revisiting this story. Since 2009, markets have primarily driven by 3 things:
- Interest rates and monetary policy.
- Technology.
- Bubbles.
It’s actually shocking how long we’ve gone without a real recession. Really the last one was 2008 and 2009. And since then it’s been one long and glorious bull market.
Sure there was COVID in 2020 and the inflation driven stock market decline in 2022. But both were primarily market declines and they were arrested well before they could cause significant damage to the economy (though 2022 was a direct consequence of how we dealt with COVID).
The main reasons why our economy has remained so strong is precisely the three factors I named above. Low interest rates incentivized consumers and companies to borrow and those with capital to invest in risky assets (pushing up their prices).
And even over the past few years when rates finally came up, technological advances and the hype and investment bubbles caused by them triumphed over interest rate driven risk aversion allowing the bull market to continue.
