It's been an outrageous and crazy couple of weeks on the international stock markets. Is the recent slide grinding to a halt or just taking a breather just before tumbling some more? And moreover, what does it mean to clever penny stock investors?
Wall Street fairly recently stumbled to its worst week of the year, and global stock markets fell drastically on concerns about rising interest levels and slowing growth. Right after rising nearly 9% in the initial four months of the year, the Dow Jones industrial average fell about 6% from a six-year high.
Stocks have been ailing for the reason that penny stock investors fear the Fed could be so dedicated to inflation that it ignores signs of an economic decline, raises interest rates excessively and sends the economy into a recession.
Global stock markets had been sent reeling last week following golden-tongued Federal Reserve Chairman, Ben Bernanke stunned penny stock investors in saying the Fed will continue raising interest levels to keep inflation in check.
And that selection will have a direct effect on the penny stock market. Higher interest rates lower penny stock prices for the reason that investors think it'll curb economic advancement and corporate profits.
But why is inflation heating up? Higher power costs. Traders and penny stock investors are also nervous that with the hurricane season officially under way, Gulf Coast refineries and oil production sites could possibly be damaged once again this summer and fall.
And greater interest rates have the capability to have an effect on the entire economy. Finance charges on charge cards will rise. So too will interest rates on home loans and home equity loans, putting additional pressure on home buyers as well as a softening housing marketplace. Ultimately, it is going to cost much more to borrow for expansion.
But does that signal doom-and-gloom for the penny stock market? When the temptation to sell every little thing may be overwhelming, some see this as an excellent opportunity. "I wouldn't be selling. I'd often be buying," stated one New York analyst.
So how exactly is that an opportunity for a money raise? It just so happens that quite a few companies caught in the market's downward spiral are cheaper than they had been a number of weeks ago.
And as any experienced penny stock investor will tell you, purchasing an incredible penny stock when it's been beaten down is not a bad way to make funds and improve business capital over the long haul.
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