With the Dow Jones Industrial Average (NYSE: DIA) and the Standard & Poor’s 500 Index (NYSE: SPY) higher by better than double digits for 2013, it is a happy holiday season for those investing in the stock market. While there are many reasons for this, there are three major ones that should make 2014 a profitable year for investing in the stock market, too.
The Federal Reserve is still on the side of the stock market.
Quantitative easing will continue, although slightly tapered. The new chair, Dr Janet Yellen, is pro-growth. That will make equities much more attractive than debt instruments. Yields will still be too low for bonds to be appealing when compared to stocks.
Yields will be higher for stocks, too: dividend yields, that is.
More companies are increasing the dividend income for the shareholders. High tech firms like Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) that were traditionally not income vehicles now pay very generous yields. That should be expected to increase in the future.
Also increasing is economic growth in China and the United States.
China has the world’s largest economy in terms of purchasing power. Both the United States and China are starting to import more and export more. That is bullish for the global economy, which makes it positive for stock markets.
Few analysts see the strong bull market year in 2014 that there was in 2013.
But the great majority are expecting a strong performance from the equity markets in the new ahead, according to a recent article in The Wall Street Journal. That should result in a happy holiday season for 2014!