How is the Market Doing? Despite all the noise being trumpeted by the media, the daily prattle about market moves is often wide of the mark and overloaded with information that is misleading or just plain inaccurate. How else to explain a jump of several hundred points one day followed by a plunge the next day? That makes no sense. Over time, the foundation for stock valuations is underlying profitability of the companies involved. As profits increase, stock prices rise, though not necessarily in perfect reflection. The relationship tends to be meaningful over extended periods, but often not in shorter spans of time. That’s all about changes in investor psychology. So let’s begin by defining the “market”. If we are referring to stocks, the most common reference is to the Dow Jones Industrial Average, which consists of 30 major companies whose progress might be considered representative of the U.S. economy as a whole. The majority of the companies included here are r
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Managment, inc. and former Managing Editor of The Value Line Investment Survey.