Blue Chip and Us Economy

To what extent can the US stock market

be influenced by the blue-chips’ investment

Introduction

US stock market has the biggest stock capitalization in the global stock markets. Therefore it can be argued that the US stock market functions as a barometer of the global economy. The statistics data from World Federation of Exchanges shows blue chips currently dominate 84.7% of U.S. stock market capitalization and the performances of blue chips becomes the most important factor of the trend of US stock market. Therefore, it means the influence of the performances of blue chips concepts on US stock market is direct but close, so that becomes the fuse of the financial crisis of 2007 to the present. The crisis was triggered by a liquidity shortfall in the United States banking system and the main reason for the crisis was the overvaluation of assets. Global financial crisis had dramatic effect on economy around the world, to be able to observe the effect it is useful to analyze how the financial crisis has affected “Blue Chips” of the world, due to stock exchange prices and liquidity of those companies has been strongly affected and introduced significant changes on their stability. But the financial crisis lasted for 4 years. Investors feel confused in making decisions for whether the time is coming to invest blue chips right now. Consequently, this essay mainly analyzes the reasons of investors feel confused in current situation of investment environment and discovers the new opportunities of blue chips and the effective strategies of blue chips’ investment. This essay will first focus on the external and internal reasons for why the blue chips are influencing the US stock market, and then analyze how the US blue chips have to a certain extent caused the financial crisis and the extent to solve the problems by every influencing factor have been done, at last, the strategies of conjecturing the possible problems of US stock market development in the future....