As the year draws to a close, investors should be wary of the stock market in December due to high risks of market downside. In recent weeks, experts have warned that the current market rally may be approaching its peak and that investors should be cautious about putting too much money into the market.
The warning is backed by numerous recent reports that indicate the market is at or near an all-time high. The S&P 500 has been trending upwards since mid-November, and is nearing new highs. This is underpinned by strong economic numbers and a generally positive outlook for the US economy.
At the same time, however, a number of influential analysts have expressed concerns that the market may soon take a downturn. These concerns stem from worries that the Fed’s recent interest rate cuts, combined with the trade war between the US and China, may be taking their toll on stocks.
Moreover, the end of the year typically sees a wave of capital winding down. Many funds and investors begin to pull back and take profits. This can lead to a decline in the market as investors trim their portfolios.
Industry experts recommend that investors take a cautious approach to the stock market in December. If you have already made a profit in the market this year, you may want to lock in those gains. For new investors, consider making smaller investments at this stage to reduce risk.
Ultimately, the stock market in December may be more challenging for investors than at other points in the year. Make sure you understand the risks and rewards associated with investing at this time, and make sure you know when to take your profits. With the right approach, you can still make a profit in uncertain times.
