Right after Brexit’s result, the markets dived. Right after Trump’s win, the markets collapsed.
And everyone points to the drop in the markets as though these indices were in some way a reflection of how well a country is doing. But that is simply untrue.
The big fuss about the Dow Jones Industrial Average number is ridiculous – an arbitrary selection of 30 companies, not even the biggest or most well-known, record their share values and this rather silly and unrepresentative value is then divided by a weird number that someone came up with in the 1800s (which we over-egg by calling it an “algorithm” in today’s parlance).
The Foostie, the S&P 500, the Hang Seng and the rest are indices of the stock market. That is all they are.
This is about the rich people.
When an index rises, this simply means the rich people are getting richer.
When an index falls, then rich people are losing money – and if the drop is significant enough and for a long enough time, then there is a chance that it might actually affect real, everyday people like you and me because companies may shed employees, or close down altogether.
This means that in a recession, everyone loses.
But at all other times, it is mainly about rich people and their value on paper.
Trump wins the election in the USA and the markets drop in value. OK, Boo hoo – rich people have less dough for a few hours because Trump then makes his acceptance speech and the markets rise to previous levels and above. So the rich people don’t lose a penny after all.
I just don’t get why the news media keep reporting the ups and downs of the markets when it is mainly only of interest to the rich – to people who own shares, to stockholders – do you know any?
It seems to be used as evidence of the foolishness of the masses to vote the way they did. The flavour is: Look what you did! See what has happened?
The markets are not a true reflection of the state of economic or political heath of a nation – these indices do not account for the common man – there is no consideration of inflation, currency exchanges, GDP, interest rates or anything other than the gambling value of company shares being traded by computers at break-neck speed over fibre optic cables.
Whenever I hear a news bulletin report the Footsie 100 or the Dow Jones, I grind my teeth and wish I were rich enough to give a damn.