US Stock Market Performance: Investments (Research Paper Sample)
Data: S&P500 daily return
1. Use only the data from 2000 January 1st to 2018 April 30th
2. Caculaute annual return, annual risk and sharpe ratio
3. Calculate annualized return and risk for the entire period.
4. Comments for performance during financial crisis, 2007-2009
5. Comments for performance since Trump’s election, 2016-2018
6. Is there a bubble in the US stock market?
US STOCK MARKET PERFORMANCE
US STOCK MARKET PERFORMANCE
US stock market performance is factored by various aspects that affect the market’s attraction at the moment to potential investors. Over time, it is expected that the performance of any investment would shift upwards or downwards indicating periods of gains and losses for the investment. Decision making by investors with regard to investment keenly follows the performance of different markets, which seems to have higher expected returns. One of the common platforms investors use is the Stock Market performance.
Stock market performance is measured by use of various indices developed to help in the management of equity portfolios (Ferruz, L et al. 2007, 633). The S&P 500 daily return stock index tracks the daily performance of the traded stocks giving investors a picture of how good or bad companies in the stock markets achieve in investment returns. As noted, enough evidence has been documented in earlier publications on the predictability of stock returns, (Cooper, M. et al.2005, 469). Thus the availability of information on is important not only for investors, but also for monetary authorities (Ferruz, L et al. 2007, 643).
Determination of a market's performance is important for decision making by the investor, therefore it is important to obtain the relevant stock market information relating to the investment they desire, to analyze before making informed choices. Investors would, want to know where to invest and what to expect in return upon maturity of an investment period. US stock market's performance like any other financial entity that can be affected by several factors that make the economy attractive to investors at a particular time.
With the aim of evaluating how US stock market did between the January 1st, 2000 and April 31st, 2018, data from S&P 500 mean monthly return is analyzed. Analysis of the data helps relate the consequent market outcomes at different times to the prevailing conditions at the time political, natural or economic in nature (Krisiloff, S. 2014). Most notably of much influence in investment markets includes the political and economic environment witnessed at that given time.
Political events revolve around elections and with it unrest as political uncertainties are anchored on the market player's perception of the future (Cunha, R. and Kern, A. 2018, 3). When there are economic crunch and political unrest, investment is slowed down and likewise, this will affect the performance and the overall return (Hiles, A., 2014).
For the period between the January 1st, 2000 and April 31st, 2018, the global economic crisis in 2007 to 2008 and the 2016 US presidential elections can be singled as notable events in the economic world that played a part in influencing how the market traded at specific times. Effects caused by the two events in US stock markets most likely affect foreign markets bearing in mind that the US is a world superpower; inclusive of but not limited to economic affairs (Jaballah, J.2012).
While seeking to evaluate market performance, we analyze data and do calculations to arrive at certain indicators of investment's health. It is necessary to calculate the value of an investment over time to know the limit of increases and decreases and of the contributing factors. Stock market performance can be analyzed by assessing the potential risks and returns (Dalvi, M. and Baghi, E. 2014, 1).
Returns are the overall gain from an investment over a specific investment period. There are two types of returns, annual return, and an annualized return. Returns portray the well-doing of an investment by comparing the investment value at the beginning and at the end of a par...
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