The economy is not the stock market

Economist Milton Friedman, the father of monetarism, famously emphasized that the stock market and the broader economy do not always move in sync. One of his notable quotes captures this distinction perfectly: “The stock market is not the economy. The economy is not the stock market.”

This observation is clearly reflected when analysing the performance of select European stock markets over the past two calendar years. Despite negative real economic growth in Germany, the German stock market has risen by 50% during this period, largely driven by standout performers such as SAP ( up 142% in 2 years and a position in our European Value Fund ).

Amid all the Europe bashing, we should shift our attention to identifying individual stock opportunities across major markets—that’s where real investment returns are made.