In our increasingly globalized world, financial markets are almost as volatile as technology is fast. With a few clicks of a button, consumers can buy and sell stock in anywhere in the world and have that transaction reflected in the stock price almost instantly.
With so many competing factors simultaneously affecting the market, how are individuals and businesses alike supposed to know when and where to invest?
For those of us who are not financial analysts or who have not dedicated our lives to deciphering the latest market figures, there are trends other than stock market prices or currency exchanges that can signal financial growth or recession. Our top experts on finance can help determine which economic indicators to look at when investing money.
1. Move with Technology.
Whether it be food, clothing, entertainment, or lifestyle, technology impacts almost every decision we make. However, technology and innovation are both extremely difficult to stay ahead of in the financial realm. The moment we hear of the latest market hike due to expanding industry in China, that rise could be undermined by a natural disaster in another area of the world. As founder and chairman of Movenbank, the first direct mobile bank in the US and UK, Brett King explains that banking and investing is “no longer a place you go, but something you do.” In his various publications and speeches on global finances, Brett explains how the preferences of the most recent generation (generation M) to “see and hear” have revolutionized buying and selling. Investors need to heed the changes in usage of and innovation in technology and make investment decisions accordingly.
2. Don’t Try to get Ahead of the Market.
As a Global FX Market Strategist who understands the underlying implications of changes in currency exchange, even Andrew Busch argues that investors “should not try to get ahead of or out think the market, just keep going with the trade until you’re proven wrong.” This statement came last week as Andy weighed in about the strengthening Euro on “Money in Motion” on CNBC. Andy maintained that the current positive trends in currency value do not necessarily allude to a long-term increase in market prices. Because of unpredictability, investors should not project current trends too far into the future, but rather should invest with caution based on what they know today.
3. Pay Attention to Architecture and Development.
In 1929 to 1930, just before the onset of The Great Depression, the Chrysler Building and Empire State Building were competing to become the tallest building. The construction of the Sears Tower and the World Trade Center in 1973 and 1974 were followed by a decade of stagflation. In 2007, just before our current recession, the Burg was built in Dubai to be the tallest structure in the world. What does this tell us? Development matters. One of the not so obvious signs that can hint at an unstable market is an extremely large development project. Vikram Mansharamani, an expert analyst in market booms and busts points out that the past world market failures have been predeceased by the construction of the “tallest” skyscraper. The reason for this is that extremely large development projects mean borrowed money and speculation from the builder and over-confidence in the value of return. Therefore, while huge development projects are not the most obvious signs of a market downfall, they can allude to over-confidence, which is deadly to investors.
4. Look at Other Statistics
Analysts can not stress enough how many varying factors there are in the financial market, especially markets such as real estate. As well published author and financial adviser, Jordan Goodman notes, “Profits come from discounting the obvious and betting on the unexpected.” When investing in real estate, considering factors such as crime rate, weather, and employment are just as important as assessing the current pricing. These factors can tell investors more about the long-term profitability of their investment than other short-term oriented statistics. Jordan maintains that investors should invest in areas or stocks that they “never think they will have a reason to sell”.
Vikram Mansharamani describes the financial market as “a domain of massive uncertainty, probabilistic development, and chaos”. Increases in globalization and technology have not helped tame the beast that is the financial market. However, moving with changes in technology and perspectives and acknowledging the less obvious market influences is the key to allowing investors to work with the market rather than trying to beat it.
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