Is the Sky Falling?

mises.org / Jeff Deist / May 22, 2017

[Adapted from a talk at the May 20 Seattle Mises Circle, “House of Cards: Has the US Economy Recovered?”]

I think we can all agree that the state of the economy has little to do with Donald Trump, at least for the moment.

But the stock markets have been riding high since his election, just earlier this week the S&P 500 index reached a record high of 2400, which is 3.5 times its low of 683 in March ’09.

I’m sure some of you are familiar with the term FAANGS that describe five major stocks in that index: Facebook, Apple, Amazon, Netflix, and Google.

What you might not know, and what I didn’t know, is that those five stocks account for virtually all of the S&P gains in the past few months. In fact, the remaining 495 companies have LOST almost as much in market capitalization as the top five have gained.

And then there is the peculiar case of Amazon, which recently celebrated its twentieth anniversary of going public. By every measure, Amazon is a modern blue-chip stock: large, well-established, dominates its sector, and is a household name.

There is just one catch: it doesn’t make money, or at least not much. And its thin profitability is OK with founder Jeff Bezos, who has poured billions into Amazon’s cloud business rather than trying to improve the company’s bottom line.

READ MORE

The post Is the Sky Falling? appeared first on Silver For The People.