CHART OF THE DAY: Why Investors Shouldn't Care About The Economy

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Equity investors should ignore economists and GDP forecasts because these predictions have nothing to do with where stocks go, according to Societe Generale’s Albert Edwards.

He cites the research of Andrew Lapthorne of SocGen, who’s data on GDP and equites shows the two have little to do with one another historically. Note, equity returns actually have a small negative correlation to GDP growth, according to this data.

Edwards cautions, however, that this trend may be changing in the U.S.. He points to profits now rising in line with economic momentum, which suggests that our new economic environment is more like Japan’s economic Ice Age.

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