The global stock market is heading for another volatile year, despite the recent gains. A Reuters survey of 120 equity market analysts predicts modest gains in 2013. Most central banks are focused on chasing consumer price inflation, which is at multi-decade highs in many countries. That means a rise in stock prices of double-digit percentages is a long way off.
There are many factors affecting the value of stocks, and not all of them can be accounted for by quantitative indicators alone. Investors should be aware that the profit from owning a stock is subject to a wide range of taxes, depending on the type of security, and the period the security has been held. In most cases, stock investing profits are taxed through capital gains tax. However, it is important to understand that both the corporation and the shareholder are subject to taxes when they profit from owning stock. This is known as double taxation.
Investors should diversify their portfolios across multiple markets. By investing in more than one country, they can get exposure to high rates of economic growth. For example, the Indian economy and the Indonesian economy are growing rapidly, and they are expected to outperform their U.S. counterparts over the next twenty years. Diversifying your portfolio is crucial to minimizing risk.
