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The automotive industry is popping, Should you invest?

Posted by on October 28, 2014 in News - No comments

The auto industry has reported record sales, and familiar names such as Honda, Toyota and Nissan are experiencing one of the highest volume years in history. Some analysts are nervous that there is a “bubble” that is going to pop, and sales will only decline from here for various reasons.

tata-motors-logoNew cars have risen sharply in demand to the tune of 10million to 16million which can be due to the “end” of our recent recession.Blame our lending standards described as aggressive or by some, similar to what built up to the housing bubble that burst our economy around 2 years ago. Many investors such as thestreet.com are afraid to invest in stocks such as Ford or General Motors, due to being “no longer interested in buying… I would avoid shares over the balance of 2014″. Translated: investors are afraid the car market is going to implode, with these new record sales far from sustainable; according to many investors and analysts stocks will reduce in value over the next year. Look for people investing in Options targeted at lower share prices in the near future. For now, my opinion is the stocks will continue to rise until the end of 2014, and possibly through Feb 2015, and then lower significantly through 2015.

According to the Wall Street Journal however, things arent all bad, they are basically going to hover for the next decade. The WSJ claims that 2014 marks the year the “U.S. sales fully recovered from the recession”. What will happen in the future? According to WSJ, sales will hit to 17.2m sales per month for 2024, similar to the 17.4 we saw last month (August 2014), meaning the auto industries wild growth in sales may sustain, but it will not increase at the same rate we have seen until now, at least according to WSJ.

tesla-motors-stockWhat does it mean to us here back home? If you are looking to invest in the Stock market, be careful for falling prices in the next 6-8 months, but you may want to play the short term game until Feb 2015. Some stocks to check out: Tata Motors (TTM) and Tesla Motors (TSLA) both of which have been having an amazing year.

Yosef Adelman on Google+

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