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Flow Theory of the Stock Market

Flow theory is about the flow of money into and out of stocks, economic sectors, and the overall stock market. I am going to focus on the overall stock market. Flows into and out of the stock market occur for different reasons in the longer-run period (greater than 1 or 2 years) versus the shorter-run period (less than 1 or 2 years). In the long-run money flows depend on: 1. Demographic trends 2. Long-run economic growth. 3. International portfolio capital…