Issue Brief: Southwest Florida Stock Market Index
July 24, 2023 / RERI Research Team
Issue Brief: Southwest Florida Stock Market Index
In 2021, Southwest Florida residents had 28 percent of their income from interest, dividends, or net rental income. Collier county had nearly a third of all residents receiving income from interest, dividends, or net rental income. The income created in this category arises from investments. One of the most common types of investments is stocks.
The stock market has traditionally been considered a leading economic indicator, particularly in the short-term. As investors attempt to forecast firm’s earnings to profit from their equity investments, stock prices give insight of investors beliefs towards the future performance of companies as well as the direction of the broader economy.
To get some insight into the performance of the Southwest Florida economy, we created a stock market index of companies based in Southwest Florida and compared its performance to the Bloomberg Florida Index as well as the S&P 500 Index. The SWFL index was developed using the screening tools available in Bloomberg terminals and then replicated it using R by scraping data from Yahoo! Finance.[2]
We first introduce the methodology for calculating the SWFL region index and then provide comparisons to the Bloomberg Florida Index and the S&P 500 with the purpose of comparing the performance of the regional equity market to the State and National equity market.
Overall, from 2020 to 2022 the Southwest Florida index as a measure of the SWFL economy has performed better than the State and National level benchmarks by yielding an annualized rate of return of 7.48 percent, higher than the Bloomberg Florida index and the S&P 500. This indicates that investors believe the future performance of companies based in the region will continue to improve and signalizes future economic growth for the region, particularly in the technology and industrial sectors.
Furthermore, as many residents of SWFL receive some form of income from investments, the favorable results of the SWFL index suggest that regionally based companies represent a good investment opportunity for the Southwest Florida population.
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Issue Brief: Southwest Florida Stock Market Index
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