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World Events Affect Stocks, But Investors Look At Big Picture

World events can affect the stock market for the short term, but many investors are interested in longer-term implications.

Paul Ehrsam with U.S. Trust in Houston says many factors are worth considering.

“We are influenced a lot by headlines we see coming out of Washington. At the federal level, the U.S. government is growing less rapidly. We’ve had sequestration. We’ve had budget cuts. But if you look at the corporate level — which is really what influences stock prices — corporations around the world are doing extremely well.”

Erhsam says the world economy is starting to increase.

“Like all investors we always worry when markets are making new highs. But at the same time, when we look at the fundamentals underlying the stock market, we see that corporate earnings are continuing to grow and also increase at a little bit faster pace than most people have expected.” 

Ehrsam worked with the Carter administration on economic analysis in the late seventies.