http://www.usatoday.com/story/money/markets/2016/10/28/stocks-season-for-gains/92845446/
Sunday, October 30, 2016
Time to Buy Stocks?
Many are looking for the stock market to improve in the coming months. November has marked the start of, historically, the best six months for stock increase. Since 1950, on average, stocks have risen by 7.4% from November through April and only a dismal increase of .4% from May through October. With the stock market having little progress since December of 2014, investors are hopeful for a turnaround. It is noted that investors should not worry about a potential interest rate hike as the price increase is most likely already incorporated into the stocks price. To help investment, it appears the economy is already increasing its growth rate to around 3%, compared to the first half of 2016 where the growth rate was averaging around 1%. Despite these positive signs, there are still some doubters out there that are planning a defensive end to their investing in 2016. This is due to the decrease in corporate stock buy backs the economy is seeing recently. It is generally a good sign of optimism when a company is implementing a stock buy back program, when a company stops buying back those stocks it is not a good sign. So there is some merit to what the doubters are arguing.
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We can already see the stock market reacting to a future event such as the Fed increasing the interest rate. It will be interesting to track how the stock market reacts when interest rates are actually increased.
ReplyDeleteInteresting article. I find it intriguing that stock prices are being set at levels anticipating interest rate hikes. If an interest rate hike were to occur, then the price for these stocks would be fair; however, if there is no increase in interest rates, then these stock prices will be a poor representation of a companies value. I wonder if they will return to normal levels following the Fed's meeting.
ReplyDeleteInterest rates should not be a problem in the future, since prices are increasing, and the increase in the share price would give the investor a great return, compared to those of interest rates. If prices are rising, and the stock prices increasing, it is a great time to invest, because of the profitable returns. It is interesting to see the impact of decreasing corporate stock buy backs on the stock market in the future.
ReplyDeleteWith all that has been said, it is important to note that at the end of the usatoday article it is stated that "in past election years 'The December rally in years when no incumbent is running for the White House, however, is stronger than normal election years, with average gains of 1.8%, versus a 1.1% in all election years', according to Wald." This election, in my opinion, can not be placed in any similar realm to what has happened in previous elections.
ReplyDeleteI'm curious as to why we're seeing a decrease in buy backs. However, it would be great to see the stock market do well and prosper again.
ReplyDeleteHopefully this upward trend in the stock market continues as it is definitely prosperous for a lot of American's when they are able to successfully invest in the stock market. If the interest rates do go up as they expect this information could be put to great use.
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