Will The Stock Market Continue To Rise Or Is A Crash Coming?

By Stephen Loke on June 26 2014

The stock market is an integral part in the wealth equation. Times of prosperity is characterized by rising stocks and improving corporate profits. Just look at the newspapers everyday and you will see that we are currently in extremely good times. Here are some facts about the stock market that will surprise you:

  1. The richest man in the world, Bill Gates owns 317,992,107 shares of Microsoft. Microsoft is listed on Nasdaq with the symbol MSFT.
  2. Warren Buffett, the 4th richest person in the world runs Berkshire Hathaway which is listed on the NYSE. Buffett owns 26,675,175 shares of this company. Guess how much is the stock worth? With a price of $190,660.05 per share, Berkshire Hathaway is the most expensive stock in the world in terms of price.
  3. Most of the top 100 richest people in the world owns shares of companies that are listed in various stock exchanges in the world. Jeff Bezos, Mark Zuckerberg, Amancio Ortega, The Waltons, Larry Page, Sergey Brin and many others have their companies listed on the stock exchanges.
  4. As a result of the rising stock market, the rich have gained $6 Trillion in the recovery since the stock market crashed in 2008.
  5. Rising stock prices have made Warren Buffett $13 Billion richer and Mark Zuckerberg $9 Billion richer.

Whether you agree or not, the stock market is THE road to super financial success. Real estates and private businesses and small companies may make you rich. But if you really want to join the elite club of the richest people in the world, you need to have a company that is listed in one of the stock exchanges around the world.

Why Invest In The Stock Market?

The preconceived notion the public has about the stock market is that it is a place to make money or lose money. As a participant in the stock market, I believe that this is not the only view you should take about the stock market. If you have a narrow view like that, you are just missing on the true power of the greatest wealth generating machine the world has ever seen.

Here are some noble benefits of the stock market:

Raising Capital For A Venture

Companies need money to start a venture. Sometimes the capital that is required are to the tune of billions of dollars. Because of the great expense, you definitely won't be able to borrow that amount of money from your relatives (unless your uncle is Bill Gates or Warren Buffett). The way that companies can raise cash for a venture is through listing their company on the stock exchanges. In return for an ownership of the company, the public part with their cash and are given shares of the company. That way, the company will be able to have the money they need to fund whatever ventures they want.

Diversify Risk

Shares of a company are owned by thousands if not millions of investors. Even if you have a brilliant idea and have real big amount of cash, you can never be sure that your company will be successful in whatever it does. By offering shares of a company in the exchanges, the owners of the company are actually diversifying the risk that are involved in the company's business. All at the same time giving the public a chance to participate in the future success of the company.

Creating Jobs For The Public

Once a company has enough cash to start their mega ventures, they need to hire people to do the work that is required. A company may need 500 employees. A thousand companies may need to hire 500,000 employees. Microsoft have provided jobs for 127,104 employees worldwide. How about Apple? Well this tech company have about 80,000 employees worldwide and have created or supported about 598,500 jobs in the US alone. The stock market is really a benefit to the global employment sector.

Hedge Against Inflation

Money that is kept under your pillow depreciates with time. Everyone knows that. That is why its better to keep your money in the bank. The 3-5% interest won't help your money grow much but at least it helps to beat inflation a bit. Does the stock market help beat inflation? Well, the good news is yes! Historically the S&P 500 (a benchmark for stock market performance in the US) has returned an average of 9.07% from Jan 1871 to June 2014. This helps to beat inflation better than putting your money in the bank. I'm not sure about other stock market around the world, but the S&P 500 has never disappointed us for more than 100 years. And today it is easy for a non-US resident to buy stocks in the US.

Risks In The Stock Market

Despite all the good things that I mentioned about the stock market, one thing that we cannot deny is the risk that are involved. Billionaires have become millionaires, while millionaires have become bankrupt as a result of falling stock prices. The stock market is definitely not a place for those who are ignorant of the perils.

Will The Stock Market Continue To Rise?

With all the good times and all the rising stocks that we have experienced in this past year, one definitely need to ask this serious question:

"Is this party gonna go on or is a crash coming soon?"

Many people have asked this question. But who do you ask? Your broker? The CEO of a company? Some top government official or the so called expert down the street? 

Let me tell you one secret:

There are people who know where the stock market is heading but if you are not paying them hundred of thousands and millions, they are not going to keep you up to date of what is happening in the stock market. Those who offer free advice usually don't know a thing about the stock market.

But here;s another secret:

If you learn a bit about the stock market yourself and do some analyzing yourself, you do not need to rely on anybody. The knowledge that you have gained will help you better than all the brokers and so called experts out there.

Having been in the stock market for some time, I have gained a bit of knowledge about this area. For those who have stumbled upon this site and read my website, I share with you some of the knowledge that I have gained over the years. I am always fascinated with wealth and rich people and this site is kinda like a hobby for me. I do earn some money from the advertisements from this site but the money is not really important. This site has given me a platform to reach out to thousands of people all around the globe and I feel glad sharing whatever that inspires me to all my readers.

Without further ado, here are some of the secrets of the stock market:

Secret No. 1 : It's All About Odds Not Certainty

We are raised in a society where our education system requires us to give perfect complete answers to do well in exam. You need to give a correct answer in math to get the 100 marks. But nobody really respect odds in our education system.

The trouble with the stock market is you can never always be 100% certain that a stock will rise or fall. Even the best stock market investor in the world Warren Buffett is wrong with some of his stock picks ( and he admits his mistakes). So, you need to get rid of the mentality that you need to be right all the time.

Aim at being right 70% of the time and you will be fine in the stock market. But how...?

Take a look at secret no. 2

Secret No. 2 Never Buy A Stock That Is Flat or Declining

Having been in the stock market for some time, there is one thing that I have always noticed. A stock that is flat or declining will help you lose money. In order to know whether a stock is flat or declining, you need to employ a tool called a stock chart. Stock charts are just historical prices of a stock being plotted on a chart. They are not crystal balls but they do give you enough info to know whether to buy or sell a stock.

Below is what a stock chart looks like. Just look at the stock chart. The stock is moving sideways or in other words it is flat. You will lose money more often than not in this kind of stocks...

The next chart is a stock chart of a declining stock. It is very easy to spot these kind of stock. The chart is moving at a -45 degrees angle. You do not ever want to buy this kind of stock. The chart below is the stock chart of Nokia. This stock went from $40 to a low of $1.70. No matter what the newspapers were saying about trying to buy a company at a low price, the experts on Wall Street were not buying it. And we all know that Nokia handphones couldn't fight the likes of Samsung and Apple. There is always a reason why a stock declines but the lesson is, never buy a company with a stock chart that is -45 degrees.

Secret No.3 : Always Buy A Stock That Is Making 45 Degrees

You probably have never heard this from anywhere before: 

Always Buy A Stock That Is Making 45 Degrees

Below is a stock that is making 45 degrees. It is an oil and gas company called Equity Midstream. 

There is always a fear among novices that if they buy a stock that is rising and have gained a lot, it is very dangerous. But the truth is, odds are you will make money rather than lose money if you buy a stock that is experiencing a 45 degree.

No matter what companies they are, if its chart is making a 45 degrees angle, you WILL make money more often than not. Take a look at other super gainers that you will surely recognize.

The next chart is the stock chart of Apple Computers.

The chart below is another familiar company. Amazon.com.

Will The Stock Market Continue To Rise?

Having learned some stock market analysis skill, what is your take of the current stock market situation? The stock chart below is the chart of the S&P 500 Index. What does it tell you? Well, it is rising at a 45 degrees angle and currently it is a very good time to be in stocks.

So What's Next? 

Ok...so far I have given you 3 secrets of the stock market.

I'm sure you have learnt something new that you have probably never stumbled across. So, do you now go out now and buy all the stocks that you can afford? If it were that easy, we would all be billionaires. There are still a few things you need to know before you dip your toes in the stock market...

My hands are tired right now after so much typing. If you are interested to learn more, do keep an eye on this page. I will update other stuff tomorrow...So stay tuned...and yes...please press like on the FB button below if you learned something new. That way, you will be able to keep up to date on my posts...Have a great day!

Press Like If You Learnt Something New : )

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References:

Forbes (The ultimate site for billionaire rankings)

CelebrityNetWorth (The ultimate site for net worth of celebrities)

TheRichest (Great site for things about money and rich people)

Wikipedia (Greatest site on earth for lots of information)