6 Current Events That Are Shaping How You Invest Your Money
Specially written for PhysiciansThrive.com by: Reina Jewel
A few months ago, we posted about concerning market trends and news. The market was showing signs of decline, and many people were selling assets in something of a panic. And even then it wasn’t entirely clear how dramatic the sell-off would become in some instances.
While the markets overall have generally bounced back since then, there remain a lot of questions for investors in 2020 – including among physicians, who are sometimes described as being too smart for their own good when it comes to investment. The tendency among some in this industry (though it is of course not universal) is for physicians to be somewhat overconfident or quick to make decisions, because confidence and decisiveness is necessary in practicing medicine. With world economies still in a state of flux, however, quick or overconfident investing decisions can backfire now more than ever. Certain types of industries and assets are still struggling mightily, and there remains a great deal of uncertainty about the state of the 2020 pandemic (which is responsible for so much of the general turmoil).
This doesn’t mean that physicians shouldn’t invest. But it does mean that a careful approach now is more important than ever, and that begins with establishing a sound, objective outlook at the state of the markets. Ultimately, this should be done with help from a financial advisor with more experience in the markets. In the meantime though, we’re going to highlight some of the current events that are shaping (and will continue to shape) how people invest in 2020.
1. Reopening Economies
As we ease into the summer, we’re beginning to see clear data about the state of reopening in economies all over the world. This tends to be measured by mobility rates (essentially how much people are moving around) and coronavirus recovery rates. Naturally, such rates vary from one country to the next. But news about recovering and reopening economies is going to continue to have an effect on markets. Naturally, progressing recoveries can mean more economic activity, which in turn can mean recovering businesses and rising stock prices. Though it’s not always easy to draw clear lines between a given economy’s reawakening and a particular stock price or asset.
2. Currency Value Fluctuations
Not unexpectedly, as world economies recover at different rates, currency values are fluctuating as well. This doesn’t necessarily impact investors directly, unless they’re trading forex. However, these fluctuations are worth keeping an eye on, because they can influence buying power, which in turn can have bearing on consumer spending and broader market activity. Any major news in currency due to turbulent world economies can also influence commodity traders. In recent months for instance, we’ve seen an overall rise in the value of gold as investors have felt sustained uncertainty toward currency. This is just one example, but movement into the gold market as currencies show volatility is fairly common, and exhibits why these fluctuations are worth keeping an eye on.
3. Oil Production
Oil production has essentially been cut for the foreseeable future. This was an emergency measure among top oil-producing nations, and a result of both the global economic downturn and an ensuing price war between Russia and Saudi Arabia. It’s meant to control the market to some extent, and to keep the price of oil from settling in at a disastrously low level. However, this situation is still among the current events that should be watched closely. As economies around the world reopen and demand presumably picks up for oil, it’s possible that lower production could actually lead to some difficulties in a number of industries that revolve around oil.
4. Medical Progress
As many readers are undoubtedly well aware, news in the medical community could also have significant implications on investment markets for the remainder of this year and into 2021. And as the world continues to learn how to deal with the coronavirus – seeking not only a suitable vaccine, but also helpful treatments – healthcare and biotech companies are in high-pressure competition. Any new devices or medications that prove helpful in managing the ongoing health crisis, or even preparing us for future outbreaks, could cause significant investment activity surrounding related companies and sectors.
5. U.S. Elections
As one analysis back in January put it, the presidential race in America (and potential trade wars) “could spring nasty surprises” for the markets. That might just be the best way to put it in 2020. Historically, there are actually some indications that U.S. elections don’t influence markets as much as some might expect. But with Americans highly polarized, and with the election now occurring amidst an ongoing pandemic and a recession, it’s safe to say it could have unpredictable effects. It’s difficult to say exactly how, in other words, but expect election-related news to have some bearing on the investment climate in the next six months.
6. School & Work Reform
Lastly, school and work reform are also set up to be interesting events from a market perspective. Right now, we don’t know how school and work are going to change in the near future. But it’s highly possible that many schools will adopt remote learning practices, as well as that many companies will stick with work-from-home arrangements. If these things happen, we could see companies and industries relating to digital collaboration, mobile education, and remote conferencing thrive, just as some of them have already in 2020.
These events and indicators don’t tell the whole story of 2020 investment markets, but keeping an eye on them can certainly help to give any physicians looking to manage their finances a better understanding of the general state of things. It can be easy, when the markets are so volatile, to neglect long-term goals and chase quick returns, or retreat to safety. But it’s precisely for these reasons that designing a plan, maintaining discipline, and assessing the markets are mission-critical for success.
Need a little help handling the roller coaster of the recent market? Let us work with you at assessing your investment needs. Get started today with a complimentary, no-obligation conversation with one of our financial advisors.