Every day, you hear that “high energy prices are bad for the stock market.” You may be shocked to learn, however, that financial “experts” were saying exactly the opposite five years ago.
So which is it – are high oil prices good or bad for stocks?
I recently came across a research paper which appeared in the Special Section of the August 2004 Elliott Wave Theorist, Robert Prechter’s monthly market analysis publication:
OIL AND STOCKS: A CRUDE CONNECTION
by Tom Denham
For decades, people have fixated on some economic indicator du jour as the key driver of stock prices. This idea is seductive because, as Robert Prechter has noted many times, it helps investors “explain” otherwise mysterious market phenomena. In the 1980s, it was the weekly money supply report. Then it was the bond market and, off and on, inflation. Later it was the near-term trend of the U.S. dollar, and for a while, […]