The normal person has a broad idea that when the stock market goes up the economy is regarded as becoming better. For those who have mutual fund savings which is being checked three or four times in a given year, the change is quite clear. However, the long bull market hasn’t really brought retail investor back in the droves, and keen to purchase and sell the only commodity that gets full credit of the trade in any market is considered a risk.
A good number of traders are still apprehensive to the lurking financial crisis yet the risk by itself is not at all the danger back in the 2008 global downturn. It was imprudent by the banks in financing their funds who should have realised that they could not privatise profits, passing losses to middle-class and marginalised taxpayers and receive a bailout as a reward.
The bull market has since that time was primarily based on healthier risk: the risk of extending credit to job creators, reformations of the healthcare system, rebuilding infrastructure and averting expensive armed conflicts. There is a need to do more risk taking yet the long rally is reflective of some of the major changes in the present economy.
A larger perspective
Recalling a few years back, iPhone was less than two years old and Google was less than a billion in terms of domain visitors and Facebook was years behind in its IPO and was just starting out to see their well earned positive cash outflow (which as this time MySpace was the no.2 ranking social network) .
Five years on, the markets have been constantly on the rise that people think stocks are simply to overpriced to buy and sell. Moreover, stocks are now considered to be the second-longest bull market since 1946. The S&P has risen 2 1/2 years without the needed adjustment that normally happens every 18 months. The market may be a bit weary this year and traders may have unloaded some of the much riskier shares in social media and biotechnology despite the continued growth of the S&P.
A holiday break is a good chance to look at a wider perspective and while there are all upward lines, each corresponding index does not have a unique path and pace that is easily predictable. For instance, the Nasdaq was able to move much faster and the Dow hasn’t quite been near its intended goal with a broad move across several sectors that would include a full upward thrust of the S&P 500.