Here are 5 top trends which wield considerable influence in determining the new stock market rules of success.
- Stock market democracy implies that hostile acquisition activity is here to stay. The Mittal-Arcelor story demonstrates that no management can afford to take share-holder loyalty for granted-and so should it be! However, could a company in which you have important investments be vulnerable?
- Stock market concerns over governance have improved transparency and integrity in management, but regulators continue to uncover serious torts in some unlikely places! Full provisions for liabilities are questionable even with GAAP controls. Retail investors must know about key executives and boards, and how they are audited.
- No stock market has ever been immune to the state of the economy in the United States. The Federal Reserve towers over the entire stock market world as investors everywhere hang on to every syllable of the Chairperson! However, the best investments may be in companies which have strong revenue lines independent of this super-power economy.
- Competition has become more even in the stock market. The Internet in particular, with an e-commerce model, makes it more possible for small companies and for new entrants to compete with large corporations. The dominance of large brands is under attack, and can produce surprises.
- Do we still need the traditional stock market structure? The Internet makes it possible for investors to operate without physical presence on a trading floor. The Dubai stock market, which trades in more than one currency, and which plans to promote Islamic banking, could be a precursor of new investing models. We could see the rise of winners from new ethnic and geographical groups, without contemporary stock market infrastructure.
Who can predict the future with certainty? Anything can happen, and each of us may be taken by surprise. There are gradual and subtle trends, and there are earth-shaking discontinuities. However, most financial soothsayers will agree that the near-term future will be quite different from today!