It's been an outrageous and crazy couple of weeks on the international stock markets. But is the recent slide grinding to a stop or just taking a breather just before tumbling some more? And more importantly, what does it mean to smart penny stock investors?
Wall Street just recently stumbled to its worst week of the year, and global stock markets fell drastically on concerns about rising rates of interest and slowing growth. Right after rising nearly 9% in the initial four months of the year, the Dow Jones industrial average has fallen about 6% from a six-year high.
Stocks have been ailing mainly because penny stock investors fear the Fed could be so concentrated on inflation that it ignores signs of an economic decline, raises interest rates excessively and sends the economy into a recession.
Global stock markets were sent reeling last week right after golden-tongued Federal Reserve Chairman, Ben Bernanke surprised penny stock investors in saying the Fed will continue raising interest rates to keep inflation in check.
And that choice will have a direct influence on the penny stock market. Higher interest rates lower penny stock prices due to the fact investors believe it is going to curb economic expansion and corporate profits.
But why is inflation heating up? Higher energy costs. Traders and penny stock investors are also concerned that with the hurricane season basically under way, Gulf Coast refineries and oil production sites could possibly be damaged once more this summer and fall.
And higher interest rates have the capability to impact the entire economy. Finance charges on credit cards will rise. So too will interest rates on mortgage loans and home equity loans, putting additional pressure on home buyers as well as a softening housing marketplace. Ultimately, it'll cost much more to borrow for expansion.
But does that signal doom-and-gloom for the penny stock market? While the temptation to sell every little thing might be overwhelming, some see this as a great opportunity. "I wouldn't be selling. I'd tend to be purchasing," stated one New York analyst.
So how exactly is this an opportunity for a money raise? It just so happens that a lot of businesses caught in the market's downward spiral are cheaper than they had been several weeks ago.
And as any experienced penny stock investor will tell you, acquiring a terrific penny stock when it's been beaten down isn't a bad way to make funds and boost business capital over the long haul.
For more details about trading and investing, search: capital pacific.
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