It’s only been one year since the Dow hit 20,000; today it’s topping 26,000
The market has been on a role as of late with only minor blips on the radar. This article points out that only horrible events could cause a decrease in the stock market. This means as of late people have confidence in the market and expect it to continue to do well. It is when people expect the market to do bad is when the market could see a downturn.
This article also points out that Trump has claimed a lot of this market success as stemming from him. The president and the stock market have very little to do with each other, as stocks are the values of shares in publicly held companies. Another aspect to take into account is the business cycle itself. We have reached a period of good growth, but will it peak and will a correction, or a drop in 10%, occur in the near future? Only time will tell but in the mean time it is interesting to watch the market rise.
https://www.nbcnews.com/business/markets/it-s-only-been-one-year-dow-hit-20-000-n841066
3 comments:
It is interesting that the article talks about the impact of consumer expectations on stock price in macroeconomic perspective.Business cycle provides an insight for investors to allocate their asset class, it seems the President is optimistic about the economic outlook, but with the recent crash of stock market, it is hard to say how the stock market is going to redistribute in the future.
In my opinion, the interesting part of this article isn't that the market is increasing by so much, it is that the federal reserve has so much power in this situation. If they even talk about increasing interest rates, the market drops a couple hundred points. I think that eventually the stock market will correct due to an increase in interest rates or a bubble pop, which is scary because a lot of people can lose a significant portion of their wealth.
I agree with David. If Bitcoin falls, for example, then those people invested significantly within that market with now be without any of that acquired wealth. Additionally, given that we are towards the end of the business cycle, it will be interesting to see how big of a collapse will occur, if any. However, the confidence within the stock market is at a record high, so hopefully that confidence does not alter in the near future.
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