US Stock Market – Bullish or Bearish?

 

 

 

 

 

 

 

 

 

Here’s an interview I did with The Standard from Hong Kong:

Many investment experts believe that the US stock market is, and will continue to be, an amazing source for wealth generation even during the time when the US economy is weak and the US currency is bearish. Mirriam MacWilliams, chief trainer of Wealth Mentors, explained the logic.

“Stock prices generally do not go up in a straight line.  At some point individuals will decide to take profits, which can create some selling pressure hence lower stock prices. Stock prices can drop faster than they go up because there are more reasons why people sell than buy. If someone is interested in making the US stock market a business, then learning how to capitalize on falling prices is the key.”

Mirriam explained that people buy because they want someone to come in at a higher price; and people sell because they are capturing profits, losing real capital or trying to sell a stock short. This simple process of demand and supply determines stock prices. Many investors, like Mirriam, do not participate in selling a stock short and prefer using options instead. Options are a tool that can be purchased on a stock to capitalize on the stock’s declining price.

“The options are generally a fraction of what the stock price is going for and herein lies the secret – the ability to make money when the stock market goes up or goes down. So now we don’t have to become economists. We follow price and let that indicate in which direction to trade the stock.  A simple 10% move on the stock can potentially yield 80%-100% return on your capital when using options.  It is an amazing tool for the generation of wealth,” Mirriam said.

All in all, the US stock market is not related to the US economy. While there are individuals who position themselves to trade on news events, some investors consider focusing on pricing as a smart alternative.

Mirriam illuminated: “The stock market is known as a discounting mechanism which means that the prices that stocks are trading at today are simply the price at which they should be trading six months or longer. For example when we hear negative news about the economy and the stock market rallies it is said that the market has already factored in the negative news or has shrugged off this event since it is still factoring previous more impactful news events. So in reality there is no real-live, immediate correlation which explains why when economics are announced, the market may behave in a way that people cannot understand.”

Mirriam concluded that as long as we have growth, innovation and a quest for greater tools, our market has the capacity to go higher. “Undoubtedly we have had and will continue to have pockets of weakness, or bearish market environments, to account for any hiccups in the economy. The sheer amount of money that comes into the US stock market on any given day can be staggering. This is what accounts for these amazing price movements. This is quite advantageous for anyone wanting to participate in the US stock market. The spread price can be small. Options may be traded on behalf of a stock instead of trading the actual stock, thereby capturing a magnified return on a small investment of capital. If you are looking for returns of 100%-200% in a few short weeks, trading options is truly the place to be!”

Mirriam has coached over 6,000 members in Asia and USA. You can find out more about her trainings at http://www.wealth-mentors.com.