There are many reasons why you shouldn’t fear the NASDAQ’s (QQQ) 5,000 level this time around. The ghosts of Y2K are indeed in the past.
The NASDAQ hit the all-important 5,000 level on March 2, 2015, for the first time after the dot com bubble burst of 2000.
High yield bonds are becoming increasingly correlated with the S&P 500 and might increase your risk exposure instead of giving diversification benefits.
Reserves of cash, if kept idle, lose their value over time.
Cash is the most liquid asset. Holding cash gives investors psychological comfort, as they have a safety net available for emergencies.
According to a survey last year by State Street’s Center for Applied Research, globally retail investors are holding 40% of their assets in cash.
If you’re preparing your portfolio for the short term, the allocation to cash should be high. As the horizon increases, allocation to cash should go down.
The main assets of the technology sector are human resources. So, capital expenditure for tech companies could involve money spent on innovation and R&D.
Despite headwinds in the form of soft wage growth, low inflation, and a falling labor participation rate, the labor market looks robust.
The number of persons employed part-time for economic reasons remains above the pre-recession levels. Full employment is still some way off.
Key takeaways from the jobs report reflect the labor market’s recent trends. The US economy added 295,000 jobs in February 2015.
The stronger-than-expected data is good news for the economy. However, Friday’s jobs report sent the markets into a tizzy.
Recently, Australian equities climbed to seven-year highs when the RBA (Reserve Bank of Australia) cut rates to a record low of 2.25% in early February.
The low-yield environment is causing investors to shift to equities. However, investors are moving away from US equities.
US markets remained relatively quiet last week as yields fell. However, bonds saw a sharp fall in yields as their prices rose.
When to invest? We think US tech valuations look reasonable now. You can also look to market pullbacks for other attractive entry points.
Two strong factors tilt the scales in favor of tech stocks—their low sensitivity to a hike in rates and their cash-rich nature.
The US tech sector looks to be fundamentally strong. The strong earnings report provided momentum for the sector. It outperformed the broader market.
Cyclical momentum favors the tech sector. Economic growth favors cyclical stocks like technology. The tech sector invests in a lot of R&D.
The US stock market had a phenomenal six-year bull run. The S&P 500 almost tripled since March 2009. It achieved another record high of 2,115.5 on February 24, 2015.