CJ....The stock market cycle is affected briefly (short term) by the day by day changes within the economy ...however the business cycle and the economic cycle have a low correlation with the Sharemarket cycle ..Therefore
they are not the primary drivers of the Sharemarket. The
primary driver is the PE Ratio Cycle and the primary driver of that PE Cycle is inflation rate cycle... the by-product of inflation is interest rates.
If is usually difficult to except the above fact as it seems a paradox until you look into the physics and behaviours of these Drivers and the other variables...then the "penny drops".
This is why Secular cycles (that I keep on harping about)and
Not the Economy are so important when you look into your crystal ball....It all to do with Group investor behaviour/ perceptions and outlooks.
It is possible for the sharemarket cycle to be in tandem with the business cycle ..however it is equally possible for the sharemarket cycle to be totally out of phase as well.
Being a share market investor and hoping for the economy to come right..could earn you dollars but it could equally be your death wish....How many times have you heard the phrase.. "The stock market is irrational".....In realty the market is seldom irrational.. its the peoples false logic and perceptions that are irrational.
NZ research is hard to come by but here is one from the USA.......It shows economic growth V sharemarket ...Surprised ..eh??
http://www.crestmontresearch.com/docs/Stock-Economy.pdf