Possibly the most popular question as the year ends for most investors is will the stock market crash in 2014? Investment gurus predict that the odds are in favor for investors this New Year because of so many positive investment predictors. If you have plans to break out of investing in bonds to a more stable and stronger stock market then here are evidences that the stock market has a brighter outlook for the New Year:
The role of the Federal Reserve
The Feds is the brains behind the operation and it dictates the tightening or the loosening of policies over interest rates and so many other things that cover economic activity. It is hinting at zero completion of its QE program whenever soon and has said its choice to begin decreasing depends strictly on the monetary information. The Fed’s has last emphasized that housing has really reduced to some degree and about an average of 185,000 new employments have been included in the course of recent months. With premium rates close zero, and the Feds unrealistic to begin decreasing until well into 2014, money markets has no spot to go but higher.
Plunge protection teams
Since the dramatic stock market plunge of 2008, investors have been confident about the stock market and this is mostly because of PPTs or plunge protection teams. These are groups of financial experts that were created to help various sectors of the economy especially during the times of economic troubles. The PPT was originally created to counter the historical 1987 market crash. At present, the PPT is composed of the Secretary of Treasury, the Chairman of the Board of Governors of the Federal Reserve, the Chairman of the SEC and the Chairman of the Commodity Futures Trading Commission. Together they form an alliance that secures investors by preventing any factors that may cause the market to drop severely.
Companies and their preventive policies
Various corporations have their own fundamental policies to protect their own investors from any potential financial harm. Companies now have their resident financial experts, advisers and teams of gurus to protect their most important asset: their investors. Corporate financial experts use indicators in the stock market to determine the strength or the weakness of their brand and therefore make more accurate investment choices through the use of these indicators.
And as far as the past year’s profits show, corporations are boasting of stronger earnings which are also clear indicators that a market crash is close to impossible. J.P. Morgan looked at corporate profit development against worldwide buying supervisors’ file (PMI) readings. Profit development on the graph lingers behind PMI by four months. As should be obvious, the later upward move in PMI is indicative of amazing profit development soon to take after. This is indicating that we might as well soon encounter a large change in profit in the first quarter of 2014.
All of these positive indicators are indicators of a stable and powerful start of 2014.
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