The Great American Stock Market Dream
For most retail investors, the American markets have always been a mysterious dream. For a lot of them, holding in global behemoths like Facebook, Amazon, Coca Cola, Alphabet, Microsoft, Tesla and Intel can sound an extremely interesting proposition. Over the last 90 days, the American stock markets have risen 45 per cent after their March 23 lows. This rise is on the back of a bullish outlook with easy liquidity, re-opening of the US economy and a very strong degree of belief that the US economy will bounce back much earlier than expected.
However, the popular American press has been inundated with reports of an upcoming recession, overvalued capital markets and the need to preserve cash given the aftermath of COVID-19. This asset class has started becoming important now as returns from other asset classes like equity and bank deposits have shrunk considerably.
This article explores if it makes sense investing in the American stock markets.
Over the last decade, the American stock markets have outperformed most other asset classes
The American stock markets are tracked by the index scores of Standard & Poor (S&P) 500, NASDAQ and Dow Jones Industrial Average (DJIA). Over the last 10 years, the S&P 500 has generated an annual return of ~15 per cent while the Indian stock market has returned between 8 - 10 per cent depending on the segment. During the last five years, the NASDAQ has generated a return of ~21 per cent while the Indian stock markets are hovering in mid to high single digits ...
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