The stock market is in a state of flux, and that means investors have to keep up with all of the big stories, which is one reason the market is now trading at a record low, according to a new study.
The research, conducted by investment bank Morningstar and Credit Suisse, found that the share price of stocks fell in the first quarter of 2017 to a record-low level of $26.9 billion, a level that would be impossible for an investor to break even on without having to buy a lot of shares.
Morningstar analyst J.P. Mirell said that the drop in market value is due to “substantial short-term volatility” and a lack of liquidity in the markets.
“While the share market is relatively stable, its valuation is still far below the historical highs of the 1990s,” Mirel said.
“It’s a market that is more than $2 trillion in size, yet investors are trading in the market with only a handful of funds.
This is a market where many people are sitting on their money, and for those that have not sold, their wealth is not yet secure.”
Mireld said that investors are looking to diversify their portfolios and are taking advantage of the low volatility.
“The share market remains volatile because of the lack of meaningful information about how to diversifiy investments,” he said.
Mere days before the market crashed, Morningstar reported that the Dow Jones Industrial Average dropped more than 6,000 points, or more than 7%, from its record high of 17,766.
Miredell said that a drop in the value of a stock could lead to a loss of capital for a stockholder.
“A company can be valued at $2 billion, and it could lose $2 million in value overnight,” he explained.
“Investors should be aware that they are in a vulnerable position.”
The researchers said that many investors are simply trying to make the most of a low-risk investment that will allow them to diversification into the stock market and earn more money.
But Mirelli said that these types of investors should also be careful about making large bets, as investors often make large bets that ultimately fail.
“Even though the market’s volatility is low, it’s still a market worth watching and is worth keeping an eye on,” he added.
“If you want to diversified your portfolio, it will be much more difficult to make big profits on a stock that is already volatile.”