3 Reasons to Remain Bullish
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Jul
2
Tim Lambert
3 Reasons to Remain Bullish
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With the Dow Jones Industrial Average (NYSE: DIA) and the Standard & Poor’s 500 Index (NYSE: SPY) in record territory, there are concerns about a correction for the stock market.  While it is certainly true that blue chip stocks such as Coca-Cola (NYSE: KO) and ExxonMobil (NYSE: XOM) (chart below) have done well, investors should remain bullish.  There are three main reasons to have a positive outlook on the stock market.

A major factor is that stocks are the most attractive asset class.

The yields for interest investments are too low.  Dividend income from ExxonMobil, Coca-Cola, and others easily tops bond yields and bank accounts.  The good buys in real estate are gone now.  Commodities have fallen in price.  In addition, for any of those asset classes there is an attractive stock.

The biggest money in the world is behind the stock market: global central banks.

The stock market was selected by global central bankers through quantitative easing to pull the world’s economy out of The Great Recession.  Higher stock prices would hopefully lead to a wealth effect.  From that, consumers would feel richer and spend more.  To a degree, it has worked.  There is no doubt that the rising Dow Jones Industrial Average and the soaring Standard & Poor’s 500 Index have made many confident enough to spend more.

There is still a great deal of money on the sidelines.

Participation in the stock market among US citizens is at the lowest level since 1998.  That means there is plenty of money to go into Coca-Cola, ExxonMobil, and other publicly traded companies to take the Dow Jones Industrial Average and the Standard & Poor’s 500 Index higher.  Stocks are the best investments for many.  Lots of them are still sitting on the sideline and do not own any equities.  Hopefully, these investors will come into the stock market to keep the bull market galloping along with the other compelling factors.

 

 



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