Question

 

Is the stock market out of control? How can the poor benefit from it?

Answer 1

 

The stock market is not the economy. Due to coronavirus problem, stock market is unable to set a clear direction. U.S. stocks have rallied for two months after plunging in February and March. During March to June, there was great fall in prices of the stocks. Every stocks(mostly) were trading at 30-50% dicount. There was no clear direction at that time. But now some stocks rallied and show good momentum. Because there was good response by the government to inject trillions of dollars into the economy and financial system. New infections are increasing at slowing rate and the government has lift up many restrictions and business are started again, this is a reason of market going up.

We cannot say that stock market is out of control now. This is a recovery now on asset price inflation than any economic data. There was many crash in the stock market due to coronavirus. When there is any bad news related to corona, stock market responds to it and pressure creates in the market which results in the crash of the market. It rebounds when there is any good news. So, its momentum can go in any direction as of now.

The poor can take benefit from it but there are certain points which need to take care. Stock market is now ranks as the best place to put money but a person who is poor and who does not have sound knowledge of it, then he should not invest his money in stock market. Because without technical and fundamental knowledge you cannot survive in the market, you will lose all your money. It is now seems easy to make money from the market because there is good momentum and stock prices are also low. They can buy stocks of good company and can take help of financial advisor before investing to make sure they will not lose all the money. But without knowledge it will not be appropriate to invest in stock market.