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Why Has the Price of Stocks Increased So Much? : 5 Elements

Why Has the Price of Stocks Increased So Much? : 5 Elements
"""The price of many stocks and the overall value of related stock exchanges have increased significantly despite the fact that it has been more than a year since the start of the first cases of this terrible pandemic and its impact on general economic conditions, particularly in terms of employment, business closures, and other factors. It's crucial to realize that there is frequently little to no correlation between stock prices and the health of the economy (and how it affects individuals on a daily basis), despite what some claim or truly believe. In light of this, this essay will try to quickly explore, examine, assess, and discuss five elements that may have contributed to what we have seen.

1. Low yields: Because there are far fewer options for where one can invest and earn any kind of return, stocks benefit from the historically low interest rates and the correspondingly low rates of return (dividends and/or interest) on bank deposits, U.S. Treasury securities, and corporate and municipal bonds. While low interest rates are preferable for borrowers, they are not for investors looking for returns. Additionally, it makes it simpler to borrow money on margin and increases demand for equities, which frequently results in a rise in price.

2. 2017 Tax Reform: Despite President Trump and those Republicans who worked the hardest to pass this law claiming it would primarily benefit the working class, its real effects appear to have favored the richest people and biggest corporations. As a result, businesses made more money since they paid less in taxes. It would certainly result in increased stock prices, so doesn't that make sense?

3.Corporate Profits: As a result of the previous two factors, several corporations saw huge increases in profits! Many companies' stocks increase when investors take price-to-earnings ratios, or P/E ratios, into account.

4. Increasing number/proportion of investors: According to statistics, more people are buying stocks now than they were a few years ago. The use of day traders, hedge funds, mutual funds, and internet trading platforms, which allow more people to engage, has increased demand, which frequently results in rising prices.

5. Greed: As we recently saw, when some used the Internet to create a market for stocks of worse quality by utilizing some of the actions and behaviors of hedge funds against them (or, in their interests), this greed and speculation has, in some cases, led to greater prices.

Although there are many elements that contribute to rising stock prices, it is wise to understand that stock investment (regardless of how excellent one's plan, etc.) is never assured. Will you promise to become a more shrewd investor?"""
 

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"Why Has the Price of Stocks Increased So Much? : 5 Elements" was written by Mary under the Business category. It has been read 28 times and generated 0 comments. The article was created on and updated on 16 November 2022.
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