http://www.financialpost.com/story.html?id=2785590
Summary
Next week is the first quarter for earning reports. The markets for North America should be optimistic this year for a few reasons. Goods and services are increasing, the demand for products are rising, and inventory is pretty low. For the United States, the mean average gain of the S&P 500 for the first quarter earnings is expected to be 36%. It sounds good, but the reason why the index predicts that it will be doing well is because it was doing poorly for the previous year. Furthermore, it is not the mean average gain that should be looked at, but rather the median average gain. The median average gain for the 30 Dow Jones Industrial Companies is 10.2% and it is because of "materials, energy, technology, and industrial sectors as well as financial services." For Canada, we are doing much better. Our top 60 companies (includes the "gold, base metal, and energy companies") has a median average gain of around 18.2%. Since the first quarter annual reports will likely be good results, it will lead to other good news, such as dividend increases.
Connection
This article is related to Chapter 15 because it talks of how well the market is performing. When a market performs well, many will want to invest in certain companies. S&P 500 and 30 Dow Jones are reputable companies that investors take into account when deciding what companies to invest in because they are outsiders who analyze and study financial strengths of companies. When they talk of mean average gains and median average gains which are going up, people see a bright future and will want to invest in these companies' analyses that have good results.
Reflection
The future seems bright, but if I wanted to invest in a business or company, I would not depend or confide completely on the indexes like S&P 500 and 30 Dow Jones, despite their reputation. In 2002, Enron was part of the S&P 500, and it led to over $1.3 billion dollars lost for those who invested in the company because they made a sudden file for bankruptcy. However, I would want to invest in a few companies under the S&P or Dow Jones because the overall performance of the market is doing well.
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Catrina I do understand what you are saying about not completely depending on the indexes like S&P 500 and 30 Dow Jones. Although they didn't do well in the year 2oo2, I thinks the economy is getting better and so will this company. I saw the graph of this company for this quarter, the growth of this company is at very safe and steady rate. Since the companies under the S&P or Dow Jones are doing well, it shows that The company will also do better in the matter of time. However,if I was an outsider investor I would do more research before I would invest in this company or any other company.
ReplyDeleteColleen Chong