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The Increase in M&As is a Good Sign |
| Mergers and Acquisition activity is certainly starting to pick up. This is a good sign for the markets.
Mergers, acquisitions and other business combinations are usually associated with a rising stock market. The recent M&A activity during the second and third quarter of this year is a good sign that business owners are feeling more optimistic about growth and are moving to try to acquire market share and capital.  The accelerating pace of M&A activity may be one of the most important factors contributing to a strong rally across the S&P 500 (.INX) and the Dow Jones Industrial Average (.DJI). However, traders will be watching closely to see how many deals make it all the way to the finish.
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Essential Reading for Traders
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| | | | | During the last few months, companies as diverse as Sun Microsystems (JAVA), Marvel Entertainment (MVL) and Ebay's (EBAY) Skype service have become acquisition targets among many others. The list is getting longer with the addition of this month's announcement that Kraft (KFT) will be attempting a takeover of Cadbury Chocolate. The number of deals currently in process outnumber those during the beginning of the last recession recovery in 2003.
Investors should understand what M&A activity is and how it may affect stock prices. The links below should help you understand what to expect as a stock investor if a company you are investing in is acquired.
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