BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Market Movers >  

Healthy Stocks Unhealthy Economy

Market Movers

by Felix Salmon
Main
The Downside of Marking to Market   The Limits of Unemployment Statistics

Recent Blog Posts

Links

Mar 05 2008 12:00am EDT

Healthy Stocks, Unhealthy Economy

Warren Buffett loves to talk about "moats": things which protect his portfolio companies from competition. And his core business - reinsurance - has some of the highest barriers to entry in the world. Chris Dillow takes these ideas to their logical conclusion:

A booming stock market is no proof of a healthy economy; the Zimbabwean market is doing well now. Indeed, in a really healthy competitive economy, stock markets would do badly - if they existed at all - because profits would be incessantly bid down by fierce competition. A rising stock market can therefore be evidence of a lack of dynamism in the economy, that incumbent firms are being sheltered from competition. The French market has out-performed the US over the long-term.

Try telling that to the talking heads on CNBC.

. □

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com
Like Portfolio on Facebook

Come on, like us—you know you want to.

Follow Portfolio on Twitter

Follow us and if you're an innovative entrepreneur, we'll return the favor.

The Mix

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

People & Ideas

Whisky To-Go-Go

Now there's a company that let's you taste your knowledge of fine blended Scotches by mixing a whisky of your own. Read More