Risks of instability in SPDR S&P ETF Trust (NYSEARCA:SPY)

Denver, CO, 07/30/2013 (Avauncer.com) – Investors of SPDR S&P 500 ETF Trust (NYSEARCA:SPY) have to be prepared for the instability that is expected to happen next week. The instability in the market may happen due to a number of events that are at risks. The major setbacks came from the S& P 500 as PC industry was unable to make money by not catering the ever increasing demands of the mobile customers. Other areas that could not perform the way they should be are the homebuilding, which had a decline of about 9%. 

The expected event risks

The market is trying out for safe areas where bottom-line growth as well as top-line growth is possible. In the next few weeks, the trends in the market could lead to this approach. Federal Reserve is expected to come out with its plans to handle the exit strategy. The announcements about the Fed policies are going to be the determining factors for how the market reacts and performs for the rest of the days in the third quarter of the current year.

Importance of price to earnings ratio

Ratios are basically used and analyzed by the investment professional as well as people interested in retail investments. This analysis is used to evaluate the performance or a company. One of the best ways to analyze the performance of a company is to use Price to Earnings ratio. To find out the performance of SPDR S&P 500 ETF Trust (NYSEARCA:SPY), the share price of the company on a particular date (date on which price to earnings ratio has to be calculated) is used. Earnings from the last 4 quarters can be taken (extraordinary accountings were excluded). Taking these two figures, P/E ratio is calculated. This ratio was first used by Graham and Dodd in 1936 and was introduced as an effective means of stock analysis of any company. Investors are concerned about the price they have to pay to have some income especially when it comes to investing in shares.