Articles: Five Reasons to Revisit Equities
After the recent stockmarket decline, many investors chose to scale back their investments drastically or sit on the sidelines completely. However, going forward, there are several valid reasons why you might renew your interest in a broad range of equities.
The stock market doesn’t play favorites.
It’s not like there’s a “secret club” for winners, and losers can’t get in because they don’t know the password. The main elements for being successful - such as doing your homework and understanding the fundamentals - are available to everyone. Although institutional investors and some well-heeled individuals may gain a leg up due to greater resources, anyone else can obtain the information needed to be successful. Just remember to balance the chance for reward against the inherent risks.
The stock market moves in cycles.
Historically, it has rebounded following a recession or a bear market. The recovery may be graded or swift or marked by volatility. Immediately after a steep decline, aggressive investors can take advantage of “bargains” in the market. As more investors return, prices will begin to increase. Typically, the market will rise until a correction occurs, usually as a result of diminished investor confidence.
The stock market is regulated.
One of the offshoots of the decline spanning 2008 and 2009 is that rules for the financial services profession have been tightened, both in terms of the financial products offered and the transparency afforded to investors. Similarly, regulators are seeking to protect investors from Ponzi schemes like the one perpetrated by Bernard Madoff.
The current environment should enable investors to make informed decisions based on the complete picture.
The stock market offers potential for both current income and long-term growth.
Although the recent downturn has affected some dividend payouts, the situation is expected to change as the recession abates. While some companies will slowly recover, others could experience more rapid growth, providing greater benefits. Because investors are likely to be more wary of risk, companies with a good dividend-paying history will likely become more attractive to investors over the long haul. Dividends are not guaranteed and must be authorized by the company’s board of directors.
The stock market provides flexibility.
You can buy, sell, or hold stocks, in any combination, with relative ease. Although this is not unique among the various types of investments, this gives equities versatility. Depending on your situation, you may trade actively or generally hold onto stocks for the long term, the choice is yours.
Keep your eyes wide open to the possibilities - both positive and negative. If you decide to return to equity investments, a professional adviser can help you find your comfort level.
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