QUESTION: My name is Alice, recently got married from a Canadian girl. I am currently working for a Deutsche bank as a Account Manager. My salary is 20,000$ a month. Out of my income, i can save around 3000$ every month. Now i wanted to spent this money as a SIP on equities. I have seen equities in last 1 year has grown but equity markets have not performed well in the last 2 quarters. I wanted to know how will markets will perform in the second half and how a consumer like me should invest in this market.
Does the US stock market offer lot of positive hopes for the days ahead?
Answer: If statistics are to be relied upon, there is a lot to look forward to. However, it can be said for sure that there is no possibility of a recession in the second half of 2013. This is because recession drivers —interest rate and profit deterioration — are thankfully absent for the rest of 2013. Furthermore, growth drivers such as, rise in demand and income and improved competitiveness have propelled the economy forward.
When compared with the last two recessions, the present market has more money and better balance. Additionally the quality of earnings is higher. Debt levels have come down considerably compared to 2007. This means the interest rates and debt amortization will be lower in the days ahead. Balance sheet cash is also much higher now so better earnings can be expected from investments.
In the days ahead, US stock markets are likely to see what they have been seeing in the last couple of months. Job growth across the United States will continue in a modest rate, capital expenditure will improve, and consumer sales are expected to grow anywhere 5% to 6%. Moreover, major there no major private sector excesses to be corrected for this year. Economic basics help prevailing market conditions grow better. So, the future offers lot of hopes.