In recent years, we have witnessed a performance of our Stock Markets that has surpassed many of them in previous periods! Although former President Donald J. Trump wanted to take credit for this phenomenon, in reality, it was probably due to a variety of factors, to a significant degree! Actually, there are at least 7 reasons for this performance. With that in mind, this article will attempt to briefly consider, examine, review and discuss 7 possible reasons/causes for this, and what it may mean and represent.
one. 2017 Tax Reform Legislation: Though politically promoted as great news and helpful to the middle class, the biggest beneficiaries of the 2017 tax legislation have been the largest corporations and the wealthiest Americans. In fact, many believe that it was actually Well-being, for the richest! One impact was that corporations made a lot more money, not primarily because they increased their sales results, but because they lowered their costs/expenses by paying less tax. Supporters of this claim that when big corporations earn more, they help others, but the promised job gains don’t seem to be happening in any meaningful way. As corporations made higher profits, their stocks looked more attractive, and therefore many investors sought to get involved! In addition, the wealthiest potential investors ended up with much more disposable income.
2. Artificially – low interest rates: In recent years, interest rates have been at, or close to, historically low rates! While it made borrowing more affordable, it also made the cost of margin cheaper. In addition, it translated – for investors, in having less options, because, the return, in fixed income, investments, such as Bonds, and bank interest, lost popularity, due to the low return!
3. cheap money: Low rates meant cheap money, and many took advantage by investing. Corporations also discovered that they could borrow at low rates and appear much more attractive to potential investors!
Four. Handling/Daily Trading: The larger investors seemed to be trying to take advantage, using steps, manipulating prices – upwards, to their advantage! Because of the ease, created, because of the Internet, we have also witnessed, much more, Day Trading, which, moreover, tends to lift Stock Markets in general.
5. The Internet: Expansion of discount brokerages and reduced minimums, commissions, etc., combined with the ease of investing, created by improvements, from the internet, have profit shares, etc.!
6. wishful thought: How much of the rise is based on fundamentals and quality, and how much on wishful thinking, hopeful reasoning, speculation and so-called advice?
7. Solid fundamentals/ optimism: Some of the optimism is justified, especially when it comes to certain stocks, with quality fundamentals!
There are many reasons why the stock price has risen! Some are deserved, others are speculative. A wise investor proceeds with careful consideration and conscience! Find out before you invest! Weigh your approaches, based on your personal comfort levels and, on a risk/reward basis.
