The Nasdaq Composite Index has recorded its strongest half-year gains since 1983, attracting investors to tech companies that can benefit from the growth of artificial intelligence.
With a 32% rise in the first half of 2023, the Nasdaq’s performance has been the best seen since the dot-com bubble in the late 1990s.
The US stock market has successfully navigated various challenges since January, including issues with local banks, government debt ceiling concerns, and interest rate hikes implemented by the Federal Reserve and other policymakers.
Notably, a few large technology companies have played a significant role in the market’s recovery. For instance, Apple reached all-time highs, pushing its valuation beyond $3 trillion, while chipmaker Nvidia’s shares nearly tripled since the year began.
Together with the New York Stock Exchange, the Nasdaq forms the world’s deepest financial market, boasting a market capitalization of over $50 trillion.
The United States, known as the land of opportunity, houses numerous global corporations and serves as the hub for innovation and startup activities, particularly in Silicon Valley.
To partake in this growth, investing in US stocks is a wise decision. Google is just one example of the many large companies accessible through the US stock market.
You might be wondering how to invest in US stocks, which stocks to select, and how to achieve high returns. In that case, consider looking at the US market index, which is similar to Nigeria’s NGX 30 index.
For example, the S&P 500 index comprises 500 of the world’s largest blue-chip US stocks, making it an excellent starting point for investing in US stocks, even if you have limited knowledge about the US stock market.
Historically, the US stock market has delivered comparable, if not greater, returns compared to the Nigerian stock market. Since 1900, the US equity market has yielded a real annual return of 6.5% (adjusted for inflation).
Therefore, an investment of $1 in 1900 would be worth $3,806 by the end of 2019. Additionally, dividends and stock splits can further enhance the value, accounting for inflation-adjusted returns.
It’s essential to note that investments in NGX are primarily made in naira, whereas the US stock market operates in dollars.
The US dollar serves as the primary reserve currency and has historically exhibited stability, mitigating the risk of exchange rate volatility and a weak naira. Over the past six months, the naira has lost approximately 40% of its value.
Being the largest and most liquid market globally, the US stock market reduces the risk of market manipulation and enhances the likelihood of finding buyers or sellers with narrow spreads at any time.
The Securities and Exchange Commission (SEC) safeguards investors against market manipulation and promotes market efficiency, integrity, and investor protection.
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