It is quite possible that the stock market will remain in a bubble, at least for the time being. The market can only go so high, as it is a self-perpetuating process, with no upper limit. This means that stocks and bonds are likely to go down over the next few months, before they will begin to recover.
Meanwhile, there are imbalances within the financial system that are allowing the problems of the housing and credit markets to get out of control. This is leading to a run on the banks, which is not likely to end anytime soon.
The “leverage” issues that are currently being seen are nothing but an indication of the growing financial crisis. The truth is that one cannot have too much leverage when dealing with sub prime mortgage lenders. If a borrower defaults on a mortgage, he or she can actually get away with paying less than the value of the property.
The problem is that some mortgage holders are making significant profits from refinancing loans that they knew were going to default. While this is a problem for the United States government, it is also a problem for the major banks.
There is already speculation that the financial crisis will lead to a severe decline in stock prices, as the Fed responds to the problems at the country’s largest financial institutions. How long the current trend will continue is anyone’s guess. Some economists expect a more severe decline than others do.
However, there is no denying that the stock markets are showing signs of fear. In fact, many people are saying that this is the worst trading week in history. Investors are beginning to take their money out of the stock market and invest it elsewhere.
There are many reasons why investors are worried about the future of the market. However, as long as the stock market continues to be successful, this is a healthy sign for those who are investing their money in this market.
The fact is that most investors believe that the market is still recovering from the last recession. They are still very confident that the market will bounce back to record highs again.
While profits are reported daily, it is difficult to make any predictions about where the market will go in the near future. One thing that is clear is that the economy has been experiencing substantial problems over the past few years. This has caused problems in all industries and all sectors of the economy.
Since stocks and bonds are perceived to be a safe haven investment, many investors are starting to question the stability of these investments. This is causing them to look towards the housing market. With foreclosures continuing to rise at alarming rates, the housing market seems to be the next area of crisis.
While the rise in the prices of stocks and bonds appears to be stable, the rise in the value of the dollar is the cause of some concern. There is a growing fear within the financial community that the dollar is becoming “overvalued”. The price of oil is even higher than it was before the crash in the stock market.
In the end, there is no doubt that the stock market is probably going to remain relatively flat. However, the level of panic in the financial sector and the risk takers are both increasing, so this could be an interesting year for the stock market.