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Some investors are suffering from fear of heights at these levels. In itself it is not so surprising, because share prices have been on a tear since March 2009. That does not necessarily mean that there is no more money to be made on the stock market, however.
Central banks across the world are still maintaining their expansive monetary policies, which means that more money will enter the financial system and the stock market. The European Central Bank will buy back its own bonds soon, while the Bank of Japan is also keeping the printers on. There is no lack of money, in summary.
Pension Fund Of The Japanese Government Will Buy More Stocks
Moreover, the pension fund of the Japanese government – the biggest in the world – will double its exposure to stocks. The fund is mostly invested in Japanese government bonds but after this transaction that portion will go down from 60% to 35%. That strategy change will support the stock market significantly over the coming months.
Many analyst also see no reason why stocks should be abandoned, despite the fact that the International Monetary Fund adjusted its growth forecast downward (-.20 percentage points in 2015 globally). Nevertheless, the recovery continues, albeit in a weak fashion.
Low interest rates are going to be around for a while and the U.S Federal Reserve is yet to raise interest rates over the course of 2015. The recently published unemployment figures were better than expected, but analysts believe the report was polished a bit.Â
