Why stocks go up

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Your 2-minute guide to demystifying money and making you richer

The markets, year-to-date

• S&P 500: 5,996.66 ⬆️ 1.96%

• FTSE 100: 8,505.22 ⬆️ 2.97%

• Bitcoin: $105,097.00 ⬆️ 12.45%

• GBP to USD: $1.2175 ⬇️ 2.74%

• GBP to EUR: €1.1846 ⬇️ 2.04%

  (As of Friday market close.)

Why stocks always seem to go up

Over the last 30 years, the S&P 500 — an index of the largest companies trading on the U.S. markets — has looked like this:

It has gained 3,331% in that period. Yes, there have been ups and downs. The market declined for two straight years following the dotcom crash of 2000 and did not regain a new high until 2007. But you don’t have to be a maths genius to look at that chart and realise there is a pattern: In general, stocks go up.

Why?

It turns out that the economy — capitalism, if you will — is designed to do pretty much one thing: grow.

Here’s a chart showing the growth of Ukraine’s gross domestic product (GDP — the sum of all its economic activity in a year). You’ll notice that Ukraine’s economic growt…