On Thursday, the S&P 500 closed at a new record high, surging 0.8% to 2931. The 3000 level is not far away. The U.S. economy is undeniably strong. And the great bulk of the income tax reductions appear to have fallen to the bottom line. If the 500 companies in the S&P 500 actually faced a lot competition then much of the tax cuts would have been competed away. Instead, it may be that the S&P 500 is dominated by companies that do not have to compete aggressively on price. They may mostly have powerful positions in the market based on brand and scale and lack of competition. Or maybe they quietly agree not to compete on price. It’s hard to know. But in a truly competitive market much of those income tax savings would have been competed away with price reductions.
Toronto was up 0.4%.
CN Rail reversed course versus yesterday and was up 2.1%.
Linamar was up 3.1% to $62.07.
Marijuana Stocks
I have not analysed these. But I think it is clear that their market values are reflecting an expectation of many years of very large profits ahead. The price paid for these stocks today is assuming those profits will occur. Early investors have made a lot of money. These stocks have created vast wealth out of thin air. All will be well if the profits materialize. But my suspicion is that in many cases profits sufficient to justify the prices of these stocks today will not materialize in many or most cases. But we shall see.
I would ask, were there massively profitable marijuana stocks in the U.S. as a number of states legalized there? What about in the Netherlands and other areas where it is legal?