The Ghost that Haunts the Stock Market!

The stock markets are hovering around all-time highs. There is one threatening cloud that gives investors trouble sleeping well at night.

The earnings season in the stock market is coming to an end. To someone's relief. One has seen a certain reporting risk when presenting the figures for the first quarter (Q1). A good number of companies have even fallen sharply even after meeting analysts' expectations. This is not so surprising, now that most exchanges are hovering around all-time high. At the same time, stocks priced to near perfection have little room for negative surprises. Companies must preferably deliver well above expectations to rise in price mowing forward.

At the same time, this does not mean that the danger of a major correction is imminent. The old saying "sell in may and stay away" has not been confirmed so far. Even with setbacks such as the rapidly increase in numbers of infected with covid19 in India and other regional outbreaks, global growth prospects are rising steadily. In particular, growth after the summer appears to be good in many countries. Also in Europe, where the great reopening makes sense. Because here, too, the vaccine rollout is starting to pick up speed. And the earnings of many traditional value companies are constantly rising. In this way, most investors have put the pandemic in the rearview mirror. But one big dark cloud remains: the fear that a sharp rise in prices will take place, forcing interests to increase.* This increase will then lead to a fall in the value of what the companies will earn in the future.

In the short term, however, that concern has been alleviated. There was little overheating to be traced in the "relaxed" American job numbers for may month. Over time, however, anxiety can flare up again. Among other things if the pricing of stock exchanges rises quickly around the world. Most recently, a somewhat unfortunate statement from US Treasury Secretary Yellen sent the stock markets into some sad days in early may. Particularly this bothers the recurrent "worst case scenario" shares that are expected to grow strongly over the next few years. Too many green and digital stocks are still well below New Year's levels. At the same time, of course, the world is in a green and digital shift. Part of the growth shares will be the winners of the future. On the way there, even the most hopeful can have a rough journey.

So dear community, whether the stock markets can soar just as high in the future remains to be seen. A lot looks promising. But expect price reactions also the next time the fear of interest ends up on everyone's lips.

Below I give you the status of the biggest index in the world from 1994-2021: MSCI World Index.

Looks haunted!?

Source: Infront.

Note: The MSCI World Index captures large and mid-cap representation across 24 Developed Markets (DM) countries. With 1,607 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Cheers -Olebulls

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