The conventional wisdom is that stocks go up when technology improves productivity. But an interesting new study tells us that's far from the whole story.
The report is written in fairly dense economic-speak, which I don't pretend to fully understand, but the important takeaway is this: roughly half the longer-term variation in stock prices in the postwar era is explained by changes in the share of profits that go to stockholders vs. workers. During the "great compression" of the 1950's and 60's when unions were strong and workers had bargaining power, market growth was below trend. Starting in the late 1970's, the investor class figured out how to capture an ever-greater share of corporate profits for themselves, and the markets took flight.
The data indicate that the main source of short-term market volatility was, basically, periodic investor panics that had no relation to actual economic events.