CounterPunch Exclusives

CounterPunch Exclusives

The Stock Market is Not Your Friend

Photo by Bradley Andrews

Imagine celebrating the price of corn or wheat hitting a record high. That would make perfect sense if you grew corn or wheat, but it’s hard to see why anyone else would be celebrating. This is the same story with the stock market, even though shareholders are a somewhat larger share of the population than corn or wheat farmers. But the basic principle is the same.

In principle, the stock market reflects expectations of future after-tax corporate profits. Expected profits can rise because the economy is expected to grow more rapidly, and corporations will get their share as profits rise along with the economy. But that has not been the case over the last quarter-century.

The after-tax profit share of national income has nearly doubled, going from an average of 6.6 percent in the 1990s to 12.5 percent in the last quarter of 2025. This explains most of the soaring stock market over this period, although the ratio of stock prices to corporate earnings is also near a record high, leading many of us to argue that we have a stock bubble.

It is hard to see why the bulk of the population, who own little or no stock, should be celebrating the redistribution from wages to profits that provides most of the basis for the run-up in stock prices in the last quarter-century. (It’s worth noting that there was massive upward redistribution from 1980 to 2000, but that was........

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