Monday, 14 September 2015

the stock bubble burst will happen after the Fed announcing raising rates, but it will not be serious enough to cause another crisis.

The Fed’s rate decision has been attracting so much attention, the financial markets have been fluctuating over the past one month. It seems raising rates is a huge issue to the financial markets. This phenomena is abnormal and shows the panic of the markets. Many of the investors fear that the stock bubbles will burst when the Fed will eventually decide to raise rates. How bad will the bubble burst this time? Unless some unnoticed problems appear like what happened in 2008, this time will be similar as the burst of the dot-com bubble. I think asset-light industries will suffer the most because they are more difficult to estimate their real values and have strong growth in terms of their market capitalisation. Because it is a system risk, without superb business performances, no stock can be an exception. Bonds with good credit quality can still be profitable. My opinion is the burst will happen after the Fed announcing raising rates, but it will not be serious enough to cause another crisis.

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