Article Abstract:
There are divisions of opinion on whether United Kingdom stock prices may have risen too high, and whether the bull market will continue. Pension savingis contributing to the market's rise, and more people are saving using defined contributions schemes with no payments holidays. There could still be a stock price drop as baby boomers sell stocks to buy annuities. Stock prices may perform well over the long term, but this was 25 years after the Wall Street crash, and 40 years, taking inflation into account. There have been other long period when stock prices have dropped.
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Article Abstract:
Strategists tend to avoid being pessimistic in their predictions on the performance of stock markets. Goldman Sachs is among the most optimistic, seeing moderate growth and low inflation as favorable for equities. Merrill Lynch sees the global profit cycle as slowing, though higher quality equities still hold attractions. There is optimism about mainland European, but opinions are divided on the United Kingdom where Chaterhouse Tilney forecasts a sharp deterioration in companies' profitability.
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Article Abstract:
There is concern that a serious stock market correction could occur, and there are a number of possible reasons for this happening. High valuations combined with inflation could lead to a stock price drop, as could slower profit growth, rising US interest rates, and the size of the US trade deficit. An increase in Japanese interest rates could also lead Japanese investors to invest at home rather than abroad. Other unforeseen factors could affect stock prices.
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