zlacker

How does this fit with the observation of the German DAX going from 12,000 (during pandemic even below 9k shortly) to currently 18,000? Can anyone give a good explanation?

>>submet+(OP)
Stonks

>>submet+(OP)
DAX (as most other indices) just captures the top 40 public companies of an economy. It doesn't tell you much about the thousands of smaller businesses. And small to mid-size companies are a huge part of the German economy.

>>submet+(OP)
The DAX is comprised of only 40 large companies.

>>submet+(OP)
Quite easily: the stock market is not the economy. In many cases they have absolutely no relationship to each other.

>>submet+(OP)
Inflation and interest rates, both recent and future ones.

Let’s say a company has revenue X and is valued as NX on the stock market. Let’s say they will be increasing prices to maintain profits in the next several years and will reach X+Y just because of that. If nothing else changes fundamentally, they should be valued at N(X+Y) at some point.