Conventional wisdom says that investing in the stock market is inherently risky but a seasoned private equity guru like Mark Hauser also believes that the market’s risks can lead to potential rewards. His philosophy recommends a balanced strategy of due diligence with individual stocks while paying close attention to several market indices. Once an investor has done sufficient research to choose a market segment or specific stock then there are several external or larger scale factors that can simultaneously impact the overall trends of the market and the price of a particular stock.
Mark Hauser suggests that analysis of stock indexes can reveal market trends that may not be apparent if one focuses too closely on individual stocks. These indexes can be impacted by a few factors such as federal interest rates, overall health of the economy, or other large-scale market disruptions.
Mark explains that the Fed can raise interest rates to slow the rate of inflation or lower interest rates to stimulate economic growth in a lagging economy based on the health of the U.S. economy. The sentiment of consumers can impact prices, when consumers spend and invest more, stock prices tend to rise. When the economy is in a downturn, consumers lack confidence in their financial futures and are more likely to save money. Businesses behave in a similar manner, when business is booming their stock price will rise but conversely, when they experience reduced revenues and profits, their stock prices often drop as well. Weekly unemployment figures can impact the stock market as a robust job market pushes stock prices upward while employment pessimism can have the opposite effect.
Mark Hauser advises investors to keep a close eye on all external factors for potential impact on the markets to effectively manage their portfolio.
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