Off the Beaten Path: The Gross Domestic income Edition

Key points

• Real Gross Domestic Income (RGDI) is a broad measure of economic activity
• The 12-month change in RGDI can be used in several different ways to identify potentially favorable periods for stocks
• When the 12-month change in RGDI either drops to negative and then reverses, or stays positive for a sufficient period of time, stocks have tended to react positively

First, a word on "relevance"

Roughly 98% of the time, I strive to make the note I am writing about topical, or relevant to today's market and/or upcoming opportunities. To be clear, this is not one of those. The other 2% of the time, I pull items from the "knowledge base" to highlight information I believe most readers are not aware of. This note is part of that 2%. Hence, this note is labeled "Informational" rather than "Actionable." That said, I look at markets from different angles and identify analytical methods that many might never consider. This one also fits into that category.

Real Gross Domestic Income (RGDI) is an economic measure

Most individuals - even non-investors - are familiar with the term "Gross Domestic Product", or GDP. Far fewer are familiar with Gross Domestic Income. Gross Domestic Income is an alternative way of measuring t