With the announcement that profits for this particular year are at an end, the United States stock market is experiencing money inflow from individual investors. The market for ETFs and equity mutual finances was supplemented with approximately 100 billion dollars, as reported by the Investment Company Institute and Bloomberg.
There is a contrasting view among UBS AG (NYSE: UBS) and other forecasters as far as the rising optimism is concerned. They are of the opinion that with estimations at a four-year high, the stock market will be sluggish.
In the previous week, there was a drop in the American stocks which resulted in a major fall in the S&P’s 500 Index since April. This happened in the midst of a rising distress about the financial crisis taking place in Europe as well as growing interest rates in the United States. There was a rise of 17 percent in the Chicago Board Options Exchange Volatility Index after a consistent low in the last seven years.
Equity investors have witnessed minimal volatility and stable profits for a major part of the year. This has given them the courage to invest back money into the market. Around 9.5 billion dollars were deposited by individuals in the month of June to stock funds.
According to Nick Skiming, professional investor (Ashburton Ltd.), what attracts individual investors is witnessing others earning money from a major rally. This is usually at a point when there is overpricing of equities. In March, 2000, the technology bubble burst was accompanied by the absorption of a staggering 102 billion dollars by mutual funds in the first financial quarter.
Skiming further added that as professional investors, they always face issues related to the time of arrival of retail investors in the market. Nick Skiming is responsible for handling 10 billion dollars at Ashburton.
The bull market is sustainable and long-lasting, said Skiming in a telephonic interview on July 9. Julian Emanuel, from UBS, New York mentioned that there will be greater volatility and lower earnings in the stock market with the Federal Reserve putting an end to the economic impetus. Emanuel is a derivates and equity strategist. In the Federal meeting of last month, officials gave consent to ending the asset buying scheme in the month of October, in case the economy held up.