It seems we witness troubled times no matter in what part of the world we decided to live. From an economic point of view, last year was the very definition of turmoil: The Dow Jones saw the worst fall in December 2018, comparable to the one that had marked the Great Depression of the 1930s.
The Brexit problem negatively affects not only Britain or the U.K. pound, but also Europe as a whole while the US interest rate increased by the US Federal Reserve last year – paired with Trump’s decisions, trade wars, and usual shenanigans – weakened the dollar and sent “economic predictability” down the drain. It is clear that politics take a massive toll on our lives and our investments, no matter their nature. So what should we do?
1. If You Base Your Investments on Forex
Forex traders had a year similar to a ride in a roller coaster. In the U.K., Brexit shook and is still rocking the Sterling to its core, while the dollar is not the most reliable currency of them all anymore. While the Euro stood its ground for the most of 2018, there is enough political turmoil in the Eurozone to keep Forex traders on their toes this year as well.
- According to Morgan Stanley experts, the dollar will have a challenging year ahead. They recommend Forex traders to build their strategies around selling the USD against the EUR during the forecast for inflation in the Eurozone.
Along with these specialists, come others, from banks and financial corporations who envision a time of depression in the U.S. economy, with the EUR strengthening its position in the second half of 2019.
As for the GPD, it seems everybody has the same stand: if a Brexit cancellation occurs, the GPD might boost by 10%; on the other hand, if the Brexit passes – one accord or another – the GPD will fall yet another 10%.
Now, if you have a Forex trading account for a while, you already know that significant news in politics, economics, and social movements will have a strong influence upon your trades.
- Experts, however, recommend you do not make impulse decisions.
- The rule of thumb is always to keep your cool no matter what. Before entering or exiting a trade based on a global event, allow the dust to settle for a few seconds, even if those seconds are crucial for achievement. They may also be vital for a loss.
2. If You Base Your Investments on Stocks and Indices
According to the same Morgan Stanley analysts, things are not and will not be as dark as they seem right now. You can expect chief positive changes for investors seeking to diversify their stock portfolios and their stock market gains.
For instance, the tech sector is on the rise. You can approach the tech sectors in two different manners:
- Wait for some highly praised and anticipated tech companies to go public in 2019, as they announced. IPOs are excellent opportunities for investors, and names like Pinterest, Slack or Palantir already keep investors on their toes.
- Keep your eyes on NASDAQ. Besides the fact that NASDAQ, in general, makes a viable investment opportunity for those interested in trading CDFs or buying index funds, tech companies usually disrupt the market as a whole – and you can take advantage of it either way.
Moreover, keep your eyes open for Japan. Besides being amongst the giants of the tech world, some Japanese companies seem to look forward to expanding their businesses.
- Japan may offer new and old investors a handful of benefits no other countries or markets do these days: globalization, breathtaking innovations in technology, low-interest rates in funding projects, a relaxed money-borrowing environment, and blue-chip corporations with impeccable financial track records and balance sheets.
- Same goes for Germany – keep an eye open for the DAX30, one of the most offering stock indices in Europe. With its strict rules for companies and its globally famous names under its belt, DAX30 is the opportunity for CDF traders versed in scalping strategies.
3. If You Base your Investments on Real Estate
Investing in real estate takes many forms and methods. You can opt for a real estate investment trust (REIT), a mortgage investment entity (MIE) – also known as a mortgage investment corporation –, a real estate limited partnership (LP), and, of course, the real property you buy and resell or you buy for renting purposes.
All come with their fair share of advantages and disadvantages, but all are profitable in the long run if you manage to protect your investments this year, especially if you are in the rental business.
Real estate as an investment is susceptible to short-term economic swings and depends a lot of global economic changes and currency trends.
- If you still remember what the 2009 financial crisis did to real estate in a rippling effect in the U.S., U.K., and the Eurozone, you know you should keep your eyes open to all breaking news referring to market plunges, exports/imports conflicts, trade wars, banks’ interest rates, and more.
- Opting for protective insurance and wrapping your real estate business in layers of protective legal structures are mandatory, especially when things are still blurry on all fronts.
Unfortunately, like it or not, politics have a direct influence on the money we make or we hope to make via our investments. If you have a broad portfolio, it may be time to talk things with a brokering company and understand the advantages (and downsides) of managed investment accounts, no matter their type.