Why is the stock market going up?
2020 was the year when the world faced a health and financial crisis in an unforeseen manner. The effect was felt on the stock market that went through a year full of immense volatility. However, the good news is that the record run of the bull market has scope to register growth in 2021, according to the experts at Wall Street. While the growth might not be like playing free slot games with bonus rounds no download no registration at an online casino, but still there are reasons to keep your hopes high. So, why is the stock market expected to go up in 2021, and what are the factors that are playing a major role in it? Read on to find out!
Historical evidence about the second year of a bull market
With the 64 percent rally noticed in S&P 500 after the lowdown on 23rd March, the skeptics may suggest that the market has nothing to make you hopeful any longer. However, looking at the past records, it seems that the second year of the bull markets are particularly great for the investors. Going by the historical trends and the current conditions, this particular bull market seems slated for a better average than its initial years. Think about the financial crisis the world faced during 2008-09 and you’ll have your answer as to why the hopes are high for a strong rebound. Monetary and fiscal stimulus, along with repressed consumer demands at the heights of the COVID-19 pandemic might bolster this rebound after the world economy opens up completely.
The new boost received by the badly hit industries
When the market corrected steeply back in March, the stocks in the tech sector (momentum stock) started dominating the bull market amid the pandemic. However, it was not long before the situation started changing, as the U.S. elections were impending. Since then, the view on the value stocks have improved. Thus, the slow growth in technological stocks as a result of this does not mean bad news for the market. New financial stimulus and innovations on the COVID vaccine have revived many badly hit sectors like energy, finance, and travel.
The worst of times comes before the best of times
The market usually follows a pattern where the best days come after the worst days. So, there is no reason for the investors to panic sell everything in the fear of market volatility in 2021. If you consider each decade starting from 1930 and sit out the ten best days in every decade, your returns would be about 19 percent. However, if you did not follow such a strategy, you could have earned a return of about 16,486 percent. In such a scenario, starting to sell your stocks without waiting for the situations to improve in 2021 will be as futile as choosing a casino without checking the availability of a no deposit bonus forfafafa slot. To top it off, remember that a point target of 3,800 has been set by the Bank of America for the end of year S&P.
The current scenario shows points towards an upward growth
Consider a few factors that are the reality of the present scenario and you will know why the hopes are up for the stock market 2021. The vaccine has been rolled out across the world already, right in the first half of the year. Though there are some things that are yet to be sorted out in terms of the distribution of the vaccine, it seems that the vaccine roll out has started on the right note as of now. The asset acquisitions and pandemic relief measures might have suggested a spike in interest rates, but it seems like that can be brought under control this year. Though the U.S. elections have made the start of the year kind of tumultuous, the S&P is going to rise up because of the other positive indications.
The investors have been emboldened by the vaccine rollout
One of the biggest news across the world for the year 2021 was the COVID-19 vaccine roll out. This was no less of a good news for the investors who seem to have been emboldened by the announcement. In fact, the stock market rally in the previous month has taken many by surprise. The signs were evident by the end of the year 2020, when the major organizations involved in the vaccine roll out had given the sign to start the distribution by this year. The result was a rise in the index to about 16.3 percent in November 2020. It is important to mention that the S&P is going to go higher up if this number was any indication of the days to come.
Summing up the stock market scenario for 2021
Going through all the facts and figures outlined above, the stock market scenario of 2021 can be summed up in the following six points:
· Historical evidence suggests that the second year of bull markets are usually good for the investors
· The badly hit sectors like travel and energy have been reviving their stand with the beginning of vaccination
· The vaccine rollout has encouraged the investors and the S&P has already been showing signs of rising
· Past records show that the worst of the days in the stock market come before the best times.
· The U.S. elections might not have much of an effect on the rising S&P
· Panic selling of stocks by the investors is not the right move in the present scenario
The bottom line
2020 was pretty much a wild year for the stock market. The matters were made worse by the pandemic shutdowns, long bull markets, and an ongoing global health crisis. The only ray of hope for a considerable economic recovery was pinned on the year 2021. Going by the reports so far, 2021 has been proving to be a good year for the investors. The important thing now is to hold on to your patience and hope for better days this year, both for the financial and the healthcare sector.
Other articles from totimes.ca – otttimes.ca – mtltimes.ca
You must be logged in to post a comment.