“Many investors look to economic growth as an indicator of future equity returns. However, the relation between economic growth and returns in the historical data has been shown to be weak. This should not come as a surprise given that returns are determined by discount rates and investors’ aggregate expectations of future growth.” Dimensional

Read the entire article Economic Growth and Equity Returns here..

The performance of the stock market has little correlation to the economy. Just because “the economy” is doing well, doesn’t mean your portfolio will do well. And vice versa. So, it doesn’t matter what the economy is doing. You shouldn’t let it control or impact how you invest your portfolio.

The difficulty, as mentioned in the attached article, is how to define the “economy” and what “your view” of the “economy” is. Everyone has their own view. In fact, understanding that, helps us better understand efficient markets.

My economy is going well. I trust your economy is also going well. Invest with that in mind. Keep cash for your near term needs. Invest the rest with your end goals in mind, whatever they may be. Control what you can control; the amount of risk you take, the amount of fees you pay, etc… and don’t be your own worst enemy.

Be well,
Dan