Stock market forecasting is the act of seeking to determine the future direction of a particular company stock or other intangibles traded on a particular exchange. The potential gain of such a trade can yield substantial rewards. If you are a beginner in stock market trading, you must know that it is an extremely complex and volatile environment. Anyone trading activity can suddenly bring about a catastrophic outcome. Trading stocks need a lot of skill and finesse. The stock market may be deemed a game for the young, but experts assert that it is more of a business than anything else.
The stock market is volatile because of the nature of the underlying goods or services that are listed. The general outlook is unpredictable. One can easily speculate how much the economy will grow in the next four years. To be a successful trader, one must forecast the direction of stocks based on the prevailing economic recovery. The Wall Street Journal has published an article titled “A Timewarp for the economy.”
According to the analysts at Wall Street, the economy might experience a mild recession during the first half of the next decade, leading to slower corporate earnings growth. Corporate profits will most likely decrease slightly, while fixed-income investments like bonds and treasury bills will experience interest rate increases. The outlook for the real estate sector is less positive with the possible onset of a global financial crisis and rising inflation.
The analysts say the stocks should experience a correction. The stocks should increase in price, and the economy will experience a mild recovery, which should lead to higher corporate earnings. However, the analysts are unsure whether this will occur because the economic recovery will not completely alleviate the problems faced by companies in the credit industry. The bankers are confident that their lending programs and government guarantees will be enough to help maintain financial stability.
On the other hand, the analysts anticipate that the stock market will experience continued weakening. They believe that the economy will remain sluggish during the first half of the next decade with no major incidents. The stock market will experience a slight recovery, but the analysts say that the situation will become much worse than it already is. The United States will start losing jobs, which will lead to higher unemployment, and inflation will begin to increase.
The analysts believe that the stock market will experience more severe declines than during the two worst recessions in the last two decades. In the first recession, the stock market suffered heavy losses, and the American economy suffered. The second recession led to a recovery, but it also brought back devastating losses. The analysts at Wall Street predict that the stock market will experience more declines throughout the next decade. In their opinion, the stock market will fall by between seven and twelve percent each year.
The bull market theory holds that stock prices should rise when economic recovery strengthens and fall when the economy weakens. If this prediction comes true, the cost of stocks will continue to decline. The analysts do not see any reason for recovery because the economic growth is slowing down significantly. The weak economy is expected to result in lower corporate earnings. Corporate profits are usually a leading indicator of economic performance.
To increase the chance that stocks will experience continued growth, the analysts recommend that investors buy large amounts of shares. By doing this, individuals will control a large percentage of the companies that they invest in. Individuals will buy up shares at a low price and sell them for a profit when the price increases. The bull market theory has been proven to be accurate time after time, and it will likely prove to be so again in the near future. The time to act is now!