Merry Market

If people seem merrier than normal this holiday season, here’s one potential reason for that:  the stock market.

846-06112288For all of its other issues, 2019 has been a banner year for the stock markets.  One recent estimate calculates that, worldwide, stock markets have gained more than $15 trillion in value this year, and the United States has led the way, with the major U.S. stock indexes all achieving double-digit gains.

That’s good news — very good news — for most Americans.  Although the stock market once was the province of the wealthy, the advent of 401(k) plans, mutual funds, and other investment devices have broadened the base of stock market investors.  According to one recent survey, more than half of all Americans own stock, either directly or through an ownership interest in a mutual fund, and that number is growing.  The increase in the number of investors obviously has helped to fuel the run-up in the markets — according to the law of supply and demand, increased demand means higher prices — but it also means that more Americans are enjoying the fruits of the strong market performance.  Whether it is retirees who are thrilled to watch their nest egg grow, or working people who are seeing their 401(k) investments making an earlier retirement a possibility, many people are now touched by the stock market — and when the markets go up, they’ve got a smile on their faces.

And it’s pretty clear, too, that a stock market surge runs in parallel with strong economic performance.  There’s a chicken-and-egg element to what causes what, but clearly growing stock portfolios make investors more optimistic and willing to spend — and their spending, in turn, helps to fuel job growth, better corporate performance, and better stock performance.  That may be part of the reason retail sales this year were very strong, with analysts estimating that Saturday’s sales set an all-time, single-day record.

Of course, markets go up, and markets go down, and a downturn is inevitable.  For now, though, many Americans are very much enjoying the stock market roller coaster ride.

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