Hi Jozef, RE: "The economy follows the financial markets. The financial markets lead the economy. Interesting, and unusual way to express it."
I borrowed the expression from an intelligent person I know, so I can't take credit for it. (I should add, he qualified it with "almost always." I believe he said we haven't had a situation where it hasn't, since I think he may have said either 1965 (?) or 1930's. I'll ask him.)
When one builds a factory, one signs a contact to do so. This is a financial contract, and it precedes the economic activity for building a factory. Financial contracts precede the economics (implementation) of the financial event.
Financial activity precedes economic activity.
Because this has almost always been the case, it's making me wonder how Nasdaq will do in the future. When a person looks at the projections on the VC industry, you can't help but wonder: a) will their contraction trickle over into the public market and what would be the impact to investors, if at all? and b) how will that impact the whole economy, if at all?
Regards,
Amy J |
