re: what's supporting the market?

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We may intuitively think of stock returns as a result of the underlying real economy growth.
However, we have observed that long term real earnings growth fell behind long term GDP
growth in many countries over the observed period.
Several factors may explain this discrepancy. First, in today’s integrated world we need to look at
global rather than local markets. Second, a significant part of economic growth comes from new
enterprises and not the high growth of existing ones; this leads to a dilution of GDP growth
before it reaches shareholders. Lastly, expected economic growth may be built into the prices
and thus reduce future realized returns.
In their refined version, supply-side models tie a country’s stock returns to its GDP growth, but
they do not suggest a perfect match between the two variables. Instead, they view real GDP
growth as a cap on long-run stock returns, as other factors dilute GDP before it reaches
shareholders.
However, the empirical analysis of the presumed link between GDP and stock growth has certain
limitations. Although we use a relatively long-term international equity data set, the analysis
results are dependent on the start and end dates of the time series, since the economy and
stocks follow cyclical patterns. Another issue concerns the role of investors’ expectations. If
expectation of future GDP growth is entirely built into today’s valuations, stock price movements will tend to precede developments in the underlying economy. A deeper analysis is needed to test for a lag between the two time series.

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What exactly are you trying to say? I'm saying the correlation between gdp growth and stock market returns is far from perfect, and in some cases, even negative, so to suggest that simply because gdp grows, that stock prices will grow, is faulty logic, which is proved thusly in this paper.

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What exactly are you trying to say? I'm saying the correlation between gdp growth and stock market returns is far from perfect, and in some cases, even negative, so to suggest that simply because gdp grows, that stock prices will grow, is faulty logic, which is proved thusly in this paper.

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I'm trying to say that JPLSU's assertion that stock will go up as GDP grows seems, in the long term, correct to me. Based on macroeconomic principles, that seems about right. Don't know why you said that was "inch deep."

That, and the guy questioning him is a count.

My bad dude.

laughing with or at me?

Ha, actually I was talking about the other guy that doesn't know anything. Although you were kind of a dick.

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What exactly are you trying to say? I'm saying the correlation between gdp growth and stock market returns is far from perfect, and in some cases, even negative, so to suggest that simply because gdp grows, that stock prices will grow, is faulty logic, which is proved thusly in this paper.

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Well, and even if the correlation were perfect with respect to the U.S. (i.e. 'U.S. GDP up' leads to 'U.S. Equity Markets up'), that still may not have relevance for the U.S.-listed company with a significant percentage of its operations overseas, as is becoming more and more the case for more and more companies. I guess the argument could be made that since the U.S. economy is doing better and U.S. investors have more cash lying around as a result, the rising tide would lift all ships. However, the company with foreign operations' earnings may not warrant such a rise in price, especially with respect to other companies with operations actually in the U.S., so it appears these stocks will eventually fall out of favor anyway.

And if U.S. GDP up = U.S. Equity Markets up, is there anything else that can be drawn from this relationship?

Does 'U.S. Equity Markets up' lead to 'U.S. GDP up'?

Does 'U.S. GDP down' lead to 'U.S. Equity Markets down'?

Does 'U.S. Equity Markets down' lead to 'U.S. GDP down'?

I think what we have here is a case of correlation =/= causation, either in total or even to a significant degree relative to other causes.

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And also, back to the beginning, population growth is definitely a measurable thing, and it plays a big role in the economy long-term as well as the stock market.

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Explain why the historic performance of only the U.S. market and only in the last 140 years is the only historic performance I should consider when predicting the future. You seriously don't think that's a selection bias problem? You would appear to be intentionally choosing the best stock market and saying "look, the stock market is great!"

For sure, and MS makes that point about foreign operations in the report as well.

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And FWIW, you can see GDP projections all the way out to 2050 here... LINK

As well as population estimates out to 2050 here ... LINK

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Where do they have the stock market estimates?

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Of course I cannot predict the future, but in the context of this discussion I can tell you with unwavering confidence that - if we as a country are still around and functioning - the S&P 500 will be higher in 30 years than it is today.

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Its very like its nominal market price will be.

You appear to be arguing that without a doubt its real returns will beat the risk free rate - is that not your claim?