The U.S. stock market is now at new highs. So why are average Americans continuing to struggle and not feeling this prosperity? What causes this apparent disconnect between market highs and citizen well-being?
As the expression goes, stocks are climbing a wall of worry. And by our estimates, despite economic malaise, the stock market hasn’t peaked, and we’re still on the way up. Here are some reasons why:
In the wake of the economic crisis, many companies these days seem to be undervalued. The current earnings-to-price ratios are high and often market commentators argue that these ratios reflect good opportunities to invest. However, the emergence of undervalued stocks comes at a time of high market uncertainty so it’s more important than ever for investors to identify strong investment opportunities based on a company’s fundamentals. Read More »
The market for corporate control is staggeringly large. In 2007 alone, the value of M&A transactions in the world was $4.8 trillion. Even in the wake of the economic crisis, it’s still a very active market with many complex features.
One of these features is the type of bidders involved in a corporate takeover auction. They fall into two categories: Strategic bidders such as competitors who are looking for long-term operational synergies, and financial bidders such as private equity firms and divisions of investment banks. Financial bidders are looking for financial synergies as well as for undervalued companies with the potential to improve operations.
S.P. Kothari, deputy dean at the MIT Sloan School of Management and a former Barclays fund manager, talks about what investors should look for in choosing an investment adviser to steer them through these turbulent markets.