August 7, 2025
By Peter Bower
And the winner is – the stock market itself. It is far better than so-called forecasters, pundits, economists, gurus, or swamis. That is because it is the collective wisdom of millions of investors making their own judgements with skin in the game – their own money! Did you know that stock market performance is a big factor in the government’s Leading Economic Indicators? Studying the economy tells one little about the stock market; however, studying the market tells you a lot about the economy. So, what is the market telling us now?
Despite regular predictions of a recession, the stock market never agreed. And the market was right! Recently, some pundits theorized that tariffs would lay our economy low. The market is not agreeing with that either. Predictions of hits on earnings also haven’t panned out to the extent feared.
So, what is the market telling us now? It is saying that the economy is fine, earnings are still growing, and asset prices in many cases can go higher. Recently, the money flow model (that we follow) signaled that stocks were likely to go higher and along a broader front. More and more sectors and companies are now participating in rallies. This is hardly what one expects if the economy were about to collapse. Enjoy the ride and stay steady my friends.
-The Lonely Bull
