Stock Market's All Time High
Updated: Aug 17
People forget the stock market is basically a bunch of businesses operating like any other private business. They sell stuff, a product or a service, they make money, they incur expenses, all the pursuit of making a profit. Profit that can either be reinvested back into the business to help it grow, or profit that can be distributed to it's shareholders - this is the return on the money someone invested in the business.
It's actually that simple. People talk about the stock market like its something else. Some kind of complicated market place that only people in suits and ties can decipher. Allow me to let you in on a little secret. Most experts have never run a business before. It reminds me of this video of Steve Jobs.
The stock market is trading at all time highs (ATH), and it's causing a lot of people to be weary of investing because of this. It may come as a surprise to a lot of people, but these ATH are supported by actual numbers coming out of these businesses - here's how:
Here is the US stock market's free cash flow, sitting at US$2,358,976,000 slightly lower than it's record levels in September of 2020.
Here is the US stock market's net profit, sitting at a record US$1,438,686,000.
And here is the US stock market's net profit margin, sitting at a record 9.7%.
The market has an uncanny way of pricing these businesses (or stocks). Millions of stock market investors/participants all around the world are pricing these securities every single day. And if you think, for one second you have more information than the collective wisdom of millions of global investors, you're either a fool or being fooled.
The stock market's ATH levels make total sense. It's not just low interest rates, it's not just millennial investors, it's not just the Federal Reserve - these factors do play a role, but let's face reality, these companies are making a sh*t load of money right now.