We’re at the stage of the cycle where everyone is getting nervous. Markets have been on a tear for a long time now. In fact, it’s the second longest bull market in history. It’s easy to conclude that irrational exuberance has taken hold. And a huge crash is around the corner. So I mulled over the big indexes looking for signs of what the big investment money was really doing.
The Bank of England (BoE) is responsible for monetary policy in the UK. They decide whether to move interest rates within the British economy. They do this to achieve a ‘stable’ rate of inflation. However, you need to ask - Is the current structure of government and central banks working? The future of financial and economic systems is with the new BOE. Except this isn’t the BOE as above...
In finance and retail industries, the convenience and immediacy of apps have rendered traditional person-to-person services less relevant for consumers. Apps aren’t just a part of business now. They are the business.
Asia is the largest region on the planet in terms of size and population, so what happens in Asia matters to our market here in Australia. And Asia is booming — the charts clearly show it. A strong Asia should keep the ASX bubbling throughout 2018, providing plenty of trading opportunities.
I’m not saying there aren’t problems in the global economy. Years of artificial global bank stimulus have caused, and will cause, all sorts of distortions. But to think that it will cause another deflationary global meltdown is playing the low probability game.
As a child you are taught things are right or wrong. Black or white. But in the social sciences this is usually wrong. Scientific precision in such a complex field of moving parts it’s impossible to achieve. And it is in this field where you, as an investor, live. Which brings me to Nassim Taleb’s view on bitcoin and cryptocurrencies.
Some investors have already doubled their returns in 2018. No, I’m not talking about crypto investors. Shareholders in small-cap, Panorama Synergy [ASX:PSY] have seen their holdings jump 100% in 2018 already.
Overnight, the main US indices all traded higher. No one really knows why. But stocks are going up, and people just want to buy them before they go up even more. It certainly feels like a crowd mentality on Wall Street right now. The bulls are clearly in control.
The sad fact is that when an investment opportunity is unloved, un-hyped and generally off the mainstream radar, no one wants to know. But the reality is that it’s unloved sectors where you can frequently make the biggest returns. Oil could be the story of 2018.
During a correction, sentiment changes. Money flows out of what’s hot and looks for ‘relative value’. This is why previously unloved stocks tend to perform better in a correction. So having a few of these type of stocks in your portfolio wouldn’t be such a bad thing right now...