Category: Investment Trends

As the US stock market turmoil begins to have a greater impact on Europe and the Far East, many investors are growing concerned about the short to medium term outlook. The tech sector, one which historically attracts a greater premium in terms of ratings in the good times, has seen some of the best names struggling. Amazon, Google, Apple and other leading lights in the US stock market have taken a hit with investors banking profits and content to sit on the sidelines.

Quality stocks will come through

There is every chance we could see more downside in the short to medium term amid a delicate balancing act of investor sentiment and market stability. In reality, if you have a significant profit and markets are tumbling there is nothing wrong with banking a profit and letting markets settle down. Even if you have to buy back your favourite quality stocks at a slightly high-level, knowing the markets have settled, this is not the end of the world. Continue reading “Quality stocks will rise again”

Despite very public comments to the contrary, investors are still extremely concerned about the fragile trade relationship between the USA and China. Despite positive comments at various press conferences, we have yet to see concrete news of an amicable arrangement between the two parties. As a consequence, markets have suffered a sell-off and there could be further bad news in the short to medium term.

Defence stocks in favour

It says everything when you realise that 10 out of 11 sectors in the S&P 500 index fell on Friday. The only sector to stay in positive territory was utilities where generous dividend payments offer a welcome degree of support. The Dow Jones, NASDAQ and S&P indexes are all showing a triple bottom graph pattern. In summary, the markets have tried to rally on three separate occasions only to return to their recent lows. Further weakness from this level could prove challenging with few obvious support levels in the short term. Continue reading “Markets fall on heightened trade concerns”

The recent volatility in worldwide stock markets seems to have “taken many by surprise” (one of many Stock market corrections over the years). Despite the fact there have been warnings from months it seems the reality of recent issues impacting the worldwide economy are only hitting home now. Human nature is in very predictable thing; we take markets to record highs on the back of overexuberance and then crash them to levels which are oversold on fear. So, what has been on the cards for many months now but been ignored by so many investors?

Base rates

Base rates around the world are still near record lows despite the fact that the worldwide recession which caused the collapse of base rates occurred more than a decade ago. Talk of an improvement in economic activity over the last decade has to a great extent been based upon cheap finance. This is the type of finance which cannot go on forever and will eventually need to be repaid. The latest concerns regarding economic growth in the US and around the world may delay any further short-term increases in base rates but they will still maintain their upward trajectory. Continue reading “Stock market corrections, when reality hits home”

Over the last decade the S&P Composite Index has increased 3.3 fold since it hit rock bottom in March 2009. Over the same period we have seen a 3.8 fold increase in earnings per share from the S&P Composite Index companies. So, while there is continued scepticism about how high the US stock market can go in the short term, earnings per share growth over the last decade has been greater than the increase in stock market indices.

If we look over the last two years, in light of Donald Trump’s inauguration, stock prices have increased by 24% while earnings per share have risen by 20%. In reality the difference is minimal but where does this leave markets in the short, medium and longer term?

Benefiting from low costs

It is no surprise to learn that not only US companies, but companies around the world, have benefited from relatively low cost bases in light of the 2008 worldwide economic collapse. As economies struggled to recover, this placed extreme pressure on wage inflation with many people “happy to have a job”. Historically wage inflation has lagged business revenues, so as the economic recovery finally kicked in this allowed companies to report improved earnings. This strengthened sentiment which allowed companies to grow with the gap between cost rises and revenue increases maintained or even widened. Continue reading “Stock markets and economic cycles”

While many people will tell you that share price graphs are good at telling the past, they can give an insight into the future. Learning how to read share price graphs should be one element of your investment education together with in-depth research and simple gut feeling.

Share price trend lines

There are various trend lines which people used to indicate the underlying strength or weakness of a share price. For example, the 30, 60 and 90 day average trendlines give an indication on the short, medium and long-term trends. Some things to watch out for include:

• Oversold/overbought positions where the short term trend is out of sync
• Crossing trendlines often indicate strong strength or weakness
• Trendlines can offer support or a form of resistance for the share price
• Trading volumes are key Continue reading “Using share price graphs to prompt investment”

The New Zealand government has announced plans to ban foreign investors from acquiring homes in the country. While residents in Singapore and Australia, together with foreign investors granted residency in New Zealand, will be exempt from the ban, the reason behind the ban is fascinating. Property prices in New Zealand have increased by 30% over the last five years and homeownership amongst the New Zealand population is at a 66 year low. So, how is this connected with the Internet and a potential apocalypse?

Cryptocurrencies and the Internet

Slowly but surely governments around the world are losing control of monetary transactions which is in turn reducing their ability to increase tax income. The introduction of the Internet opened the worldwide market to businesses and individuals and the emergence of cryptocurrencies is fuelling the flow of money around the world – money which governments can’t control.

New regulations

It is interesting to see that governments around the world have introduced an array of regulations aimed at curbing growth in cryptocurrency transactions. However, the surge of demand for cryptocurrencies is growing and regulations are proving inadequate and behind the curve. Continue reading “Has the Internet created the ultimate apocalypse scenario?”

As the trade war between the US and China continues to escalate the press seems to be making more of the issue than equity markets. Since hitting a June high of 25,322 the Dow Jones Industrial Average today stands at 24,618 which while a significant drop is not catastrophic. When you also bear in mind the all-time high of 26,616 was hit on 26 January 2018 perhaps the trade issue is not a major problem as yet.

The situation regarding the NASDAQ Composite index is even less concerning with the market falling from a June high of 7806 to 7706. The figure of 7806 is the all-time high for the NASDAQ Composite index which occurred on 11 June 2018. Indications suggest that the performance of companies such as Facebook and Netflix, both recently hitting all-time highs, has helped to support the index. Continue reading “Are markets concerned about the US/Chinese trade war?”

Stock markets and economies around the world are extremely cyclical. Human nature dictates that markets will be overbought and oversold with unerring regularity. In light of the 2008 US mortgage crash we saw one of the worst economic downturns in living history. Stock markets collapsed, economies dried up, banking systems froze and the end seem to be nigh. Fast forward a decade, stock market are flying high, economies are starting to pick up although it has to be said this is based on cheap finance with historically low interest rates. In light of this extreme volatility many people assume that start-up funding can be difficult to find. Continue reading “Quality start-ups will never struggle for funding”

Over the last few months we have seen a number of developing issues involving the likes of Facebook and Tesla. What is becoming obvious is that markets are extremely good at digging out accurate information as opposed to working on hearsay and speculation. While there is nothing to suggest that the likes of Facebook Tesla have misled the markets, what we do know is that the cumulative impact of various expert views can bring issues to ahead as we have seen.

Professional traders

Whether you want to call them professional traders or “insiders” there is no doubt that many investors have been aware of issues within Facebook and Tesla for some time. We have seen constant selling into strength, we have seen volatile share prices and while private investors are only able to value companies using official company announcements, there is a lot more going on under the surface. Continue reading “When markets know best….”

Earlier this week tech stocks took a hit amid concerns they had pushed too far too quickly. This proved to be relatively short lived with a partial rebound towards the end of the week which opens up a very interesting situation for the S&P 500 index. So far this year the S&P 500 has shown gains each and every month and while December is currently on a knife edge, a rebound in stock prices for Facebook, Apple, Netflix and Google has put that record within reach. If the S&P 500 index is able to show a monthly increase in December this would be the first time ever that every month has seen a rise in the index.

Will December follow tradition?

Historically December is the most giving month for stock markets where investors look to the future and begin to plan their strategies for the following year. As a consequence, it looks highly likely as though December will end on a high note and bring to an end a succession of 12 monthly increases for the S&P 500 index. Continue reading “Is the short term tech share sell-off over?”