The stock market has done terribly in the last year and that is absolutely no secret at this point. Instead of looking back on what has happened, I decided to take a look forward and look at the five biggest threats to the United States stock market system. These threats represent real and significant problems for everyday investors, as well as institutional managers and could affect the lives of millions of people.
Five Biggest Threats to the United States Stock Market
1. Corruption/Lack of Investor Trust- This is at the heart of the market’s problems right now and this must be addressed right away. A stock market cannot function properly when the people who are participating in the market or would normally participate do not trust the system and believe phony things are going on. The scandals of late, including the Madoff scandal, do nothing but crush investors confidence in the system in place and encourage them to put their money elsewhere.
2. Terrorism- Obviously from a human life standpoint this one is number one on the list. Terrorists will attack in any form they possibly can, and they certainly would love to crush the main source of wealth over the years, the stock market in America. This is a threat that is multi pronged and could cause investors to lose confidence in the market and the economy overall. Keeping our country safe from terrorism is vital in so many ways!
3. Job Losses/Unemployment- The economy has been hurting of late, but the thing that has many people the most concerned is the tremendous amount of jobs being lost in our country. When jobs are being lost on a consistent basis there is no way the stock market can function properly. Uncertain futures for American workers equals an ugly stock market.
4. Banking System Failures- The past year has shown just how important the banking sector is to our economy and just how much it can rattle both the stock market and consumer’s confidence. If consumers are unsure about their banking institution can you really expect them to be investing in stocks?
5. Too much regulation/Not enough regulation- There is delicate balance of regulation that must take place for the stock market to work in an efficient and corruption free manner. The stock market clearly needs more regulation of balance sheets of financials, but what we don’t need is the government calling all the shots and regulating every move a company makes.
The stock market has lots of uncertainty today. These five threats will be ones to watch in the coming months and years in the American stock market.