Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Continued M & A good for Equity Funds - Bridgewater Associates
"Bridgewater believes that the M&A boom isn't over yet; good news for equity investors. Three-and-a-half decades of data supports Bridgewater's conclusion that equity markets continue rising into the M&A peak. The average price increase in the year before an M&A peak is about 10%. In the year after the peak, equities fall around 25% on average. Despite the recent volatility in equity markets, corporations continue with M&A, buybacks, and financial engineering. Bridgewater concludes:
As mentioned the normal linkages suggest a continued, self-reinforcing buildup in activity that would be supportive to the equity market and the economic expansion in the short term, with increasing vulnerabilities to an eventual tightening of monetary policy or weakening of the economy down the road."
