Economics: What Is Driving The Perpetual Stock Market Gains?

(Drivebycuriosity) - The US stock market reached new all-time-highs. The chart above shows that over time the stock market follows an continuous upwards trend and all-time highs are normal & frequent. Bear markets, crashes & correction are just temporary temporary aberrations. It is remarkable that the regimes of Regan, Bush Father & Son, Clinton, Obama and Trump (so far) did not harm, so the trend should continue even with Elizabeth Warren or Bernie Sanders

The chart below also shows that the trend of climbing stock prices exists for centuries and seems to accelerate - as everything. Obviously the perpetual climbing stock prices (with short interruptions) mirror two longtime trends: A growing global economy & rising company profits.

I claim that the favorable long term trends will continue and will maintain the perpetual stock market gains:

Companies are getting more efficient & more productive over time - thanks to learning processes and the technological progress. Companies are learning organisms because they are managed by humans who are continuously improving themselves and their companies. There is a permanent evolution process which is driving the productivity (output per worker) and the winners are getting fitter and more efficient than before. 

Global growth, climbing company earnings & rising stock prices are fueled by the ongoing automation.  Since the early 18th century (the first industrial revolution) the technological process has been enabling companies to produce more goods & services with the same amount of employees. More and better machines (robots) are doing the work of people which translates into lower costs, higher profit margins, climbing earnings & a growing global economy.

It seems that this process is accelerating and we are at the begin of new industrial revolution. We are experiencing a rapid advance of information technology, meaning combinations of computers, smartphones, Internet and other digital systems. Software - which is increasingly Internet connected and uses more and more the cloud (access to huge external data centers) - organizes the whole business: Creating new products, inducing machines to run more efficient, finding cheap suppliers, manage customer relations and so on. Car producers and many other manufacturers are increasingly using robots and similar machines to reduce their costs. Companies are also beginning to use 3D-printers to become more cost efficient and flexible.

Global growth is also fueled by the emerging markets which are getting stronger over the time. The catching-up process in China, India, Indonesia and a lot of other countries translates into high growth in large parts of the global economy that creates continuously rising revenues & profits for global companies like Starbucks, IBM, Caterpillar, Apple, Microsoft, Google and other members of the S&P 500.

To be continued