Stock Investment News October 2016 – 5 Things Investors Cannot Remain Complacent About

Introduction:

The year 2016 is coming to a close. It’s goddamn October already! And Election Day is not too far behind! The optimism of investors seems to be at a cataclysmic high and why not? This buoyant team has survived the harshest of recessions and other impediments that the text-book financial jargon has thrown at them. There have been market upheavals and financial panics. Despite that, the market has performed exceptionally well and has attained record highs.

Five Major Disruptions Investors Need To Be Cautious About:

Although the equity market continues to perform exceptionally well, investors shouldn’t turn lackadaisical and display complacency. It’s true that the market has displayed an upward trend with no major upheavals in current recorded time however that doesn’t mean that the equity holders do not exercise caution. After all, it is the month of October, and several interesting events have occurred that could agitate your portfolio of stocks.

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So without further ado, here are the Big Five:

The US Presidential Election:

The aftermath of the presidential election could spell an alteration in policy, with everything from government spending to price controls to trade restrictions heading for an uncertain change in the coming year. Investors are advised to stay on their guard.

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Lowered expectations:

The earnings of firms are at a decline.

If one would examine the results one would find that the corporate earnings for firms are above the average expected earnings. However, this isn’t because firms are doing well, but because of lowered expectations.

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The Brexit Issue:

Brexit resulted in an 800-point decline in the Dow, but it lasted for just two days. As of now, the market is stable, but an uncertain event could bring the Dow dropping again.

The drop will come.

It is uncertain whether it will come this month or in December or probably sometime next year. But it will come nonetheless.

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The Interest Rate Hike:

The first interest rate hike somewhere around June was largely ignored. Now investors have a hard time figuring when the next hike would come.

Who knows, October could be the month?

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Deflation – Inflation:

Due to the fall in goods demanded, low circulation of money and overall lack in demand that deflation poses, it is much more of a threat as per market perspective than inflation can ever be. A bout of deflation caused Japan to go under a deflationary spell for twenty years, the effects of which are still prevalent in Japan’s stock market.

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However, one cannot laud inflation either, it’s harmful as well. Therefore investors should be on the lookout for inflationary/deflationary spells.

Conclusion:

So what can be done? As always, my advice to investors would be the same: Do not panic. A small change in the market situation does not require a drastic change in your portfolio of stocks. Nevertheless, an investor should stop looking at business scenarios through rose-tinted glasses, but should rather assess the situation objectively, and be ready for any major consequences.

Submitted By : Kashif Jamil (kashif@datacusp.com)

Contact No. +1 201 258 4704 (NJ, USA)/+ 91 33 66157400 (India)

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