Searching for a connection between asset prices and the business cycle is no spring chicken. The economist Irving Fisher, for example, theorized a link between short-term interest rates and economic expectations in his 1907 book The Rate of Interest. This was also the formative period for the Dow Theory. The strategy’s chief proponent, William Peter Hamilton, editor of The Wall Street Journal during the early 20th century, outlined the case for using the stock market as a proxy for measuring the ebb and flow of the economy. Reviewing the nexus between the broad trend and the market, Hamilton advised in his 1922 book The Stock Market Barometer: “What we need are soulless barometers, price indexes and averages to tell us where we are going and what we may expect. The best, because the most impartial, the most remorseless of these barometers, is the recorded average of prices in the stock exchange.”

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