Wednesday, 20 November 2013

Now's the time to invest in equities

I'm not wrong. 
Provided you pick semi-decent stocks or even an index-tracking ETF, I think things look pretty good for the next few years. 
Firstly, both retail investors and big institutions are keen to get back to the boom years. The signs of recovery we've seen in the past few months have started a general upwards trend in stock prices. Investors are keen to see return on share values back to what they were before the crisis, and this (possibly prematurely enthusiastic) return to shares is pushing up prices with every new bit of good news we get. If you look at this chart, you can see this year's re-found love for the FTSE, and that the bigger drops have been pretty short lived.
Secondly, if the markets were to take a significant dip, we could see companies lose their new confidence and curb what small growth we are currently experiencing. The BoE & Fed don't want that, so would extend their forward guidance on interest rates or QE, relieving leveraged investors, increasing market liquidity and pushing stock prices right back up again.
And finally, the most obvious reason, the economy does seem to be recovering at the moment, which is good for all business and should improve their valuations - and thus share prices. Yep, that's the most basic and yet a reason we sometimes overlook.
So ... get buying those equities! 
(Not official financial advice - I'm 15, remember)

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