Conceptually, economic growth is a function of two factors: the growth of jobs, and the productivity of those employed. Capital Markets Need GrowthOn the surface, the logical answer would appear to be that GDP per capita, would be the appropriate measure, but it's not. The fact is, a positive overall growth rate of the economy is necessary for the market indexes to advance because growth is a fundamental valuation metric. The growth engine that was Japan's economy in the 1980s gave way to stagnating population growth in the 1990s. Beware of Passive InvestingRational markets will eventually reflect slow economic growth, and as this slow growth unfolds, it will behoove investors to examine each portfolio holding for its growth characteristics.

Source: Forbes June 09, 2017 18:57 UTC