The US Equity Market
Therefore, in simple terms, the term ‘Equity market’ refers to the meeting point for both the buyers and sellers of the stocks. It is important to point out that these shares may either be public or private. The Equity market is characterized by a number of people, for example, brokers who are paid commission based on the number of securities traded. Consequently, most large companies may decide to list their stocks in multiple markets across the world. However, the equity market is characterized by both large and small scale companies as well as individual investors. 7 600 Midcap 14. 5 400 Dow Jones 17. 3 550 From the table, it is clear that the best performers of the year ware Nasdaq Composite with an index of about 28. 2% followed by Dow Jones at 17.
The reason behind this is likely connected to the size of the companies as many buyers and sellers in the Equity market have shifted to trading in larger companies. The 2014 US Equity Market Returns According to MacMillan (2014), the 2014 financial year ended with a small haircut. The Dow in 2014 shed a whole 160 points on the very last periods of the year simply because investors were worried about the reducing oil prices in the energy sector. On the other hand, the whole year had been good in terms of performance in the Equity market. The Dow finished 2014 with a gain of 7. 5% as the S &P rose up to 500 which can be translated to mean 11. There was a general 13. 4% gain with a poor 500 stock index due to the electioneering period.
Generally, technology sector dominated the Nasdaq with a 15. The stock Gauge Company followed with 1 13% increase. The worst performers of the year were Blue-chip Dow Jones at 7. 54% drop. The Nasdaq fell by 7% which was equivalent to 645 points while the S & P collections fell by 64. 43 points. Several market analysts of the year connected this crush to overheated markets which had risen for the previous 30 months (Harris 1998). Therefore, based on this simple analysis of the market returns in the 2007's financial year, it is evident that both the subsequent and large capitalization markets registered a drop in the return as at the closure of the financial year. The average pricing, in this case, involves the past 20 years; from the end of 1997 to 2017. The S & P price to Book Value Image obtained from the book by Chang Christoffersen & Jacobs, 2013.
From the table, the current price to book value within the given period 2000- 2017 will be given by; 3. 05 of the value = -1. 53% The calculated mean and medium for the stocks in the Equity market are 2. It is important to understand that the average figure is for an estimate on the return on dividends because the amount of return depends on the company selected for investment. Rate of Growth of Earnings According to Trent Hamm 2016, the average rate of growth since 1950’s to 2017 has been maintained at 7. 0% throughout. According to Hamm the dividend and inflation value have always been maintained to a stable value, owing to a better US GDP and thus, there were no significant changes in the rate of growth of earnings since the 1950’s.
Investment Recommendations On average, the S & P average value has been around 2500 in the past century. Examining the wider Equity market, the total distribution will be distributed as follows; 16% in the Mid-cap investment, 35% for Large-cap, 16% for small-cap, 20% for foreign stock and finally 13% in the intermediate term bond. Therefore, with such kind of potential investors given at my disposal, I will adopt the described aggressive portfolio because in the long run, will be sure of tangible returns. Recommendations Various investing strategies and techniques are slightly subjective than objective. Each investor seeks to find a simple investing way that suits their own needs. However, multiple methods have been employed by the most successful investors in the different financial markets. The success made by these individuals is proof that value investing can be applied to any investor and make them get profits.
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