Stock Market - 5 Reasons to Invest in the Stock Market in 2010 .....

Although the economic recovery won't finish in 2010, next year is plenty of investments opportunities out there for those willing to take some action. The main 5 reasons to invest in the stock market are:1. Low Interest rates: The main central banks (The US Federal Reserve, the Bank of England and the European Central Bank) will keep the interest rate at its lowest to promote borrowing between banks and from commercial banks to final users. That also means you won't be getting much for your savings. Have a look to your savings account. How much do you get for your savings? 1%, 2% interest? That means that if you make a 3% gain in the stock market would be definitely worth the investment. To make a 3% gain is much easier than to make a 10% gain. If the banks were offering you 10% for your savings you should aim for a higher return in an investment. That makes it more difficult. With historical low interest rates to make more money in the stock market than in your savings account is not rocket science.

2. Volatility: Analysts have said that the 2010 will be plenty of up and downs, that means greed and panic attacks. But this also means opportunity for those able to wait the right moment and keep their nerve. As Ben Graham said: "The intelligent investor is a realist who sells to optimists and buys from pessimists". With a high volatility the market will incur in many inefficiencies, that means that some stocks will be underpriced due to panic attacks. In other words, you'll be able to buy a $1 for.50 cents.

3. Bargain time: After the recent crisis we can find many undervalued companies. In March 2009 the Dow Jones went to its August 1998 level, and so did all major stock market indexes. Does this mean all companies in the world were doing really bad? Not really. What actually happened is that some big companies did bad, really bad (some even disappeared - Lehman Brothers) and investors panicked and let their emotions take the decisions. Most companies have been affected by the credit crunch, their revenue/profit forecast has been adjusted, but good companies still make money. If a company makes 10% less profit, but its share is selling a 30% less than it was before you are buying it at a good price. There are many companies at the moment that are selling at a discount price.

4. Some industries will never disappear: The economy is cyclical. It has up and downturns, and downturns are normally caused by a key industry that gets into trouble. Does this mean that the industry will disappear? No way. Without certain industries our world wouldn't be possible. Can you imagine a world without banks? Can you imagine a world without cars? Without oil? Without electricity? When a key industry causes a financial recession the authorities and the industry itself put in place regulation and norms to avoid future problems and to improve its efficiency. After some time the industry will outperform its level before the downturn.

5. After the storm the sun always shines: Institutional investors account for 70% of all trading and most of them have managers that are evaluated regarding their quarterly performance, that makes them extremely shortsighted. The crisis won't last forever and once is over the companies that survived will be stronger than before. Many companies that didn't pay any dividend will resume to pay a dividend in 2010 or 2011. That's why you should look for companies with a strong financial position enough to survive the storm and enjoy their dividends once the sun is shining again.