As a financial trader, you will know that the key to success and profitability lies with adaptability, and the ability to recognise trends and their potential impact on the market. We live in changeable economic times, and as an investor your portfolio must reflect the evolutionary nature of the global climate and the financial market’s enhanced level of volatility. In the quest to optimise profitability and secure long term gains, however, it is also important to remember that there are some investment staples that should feature as part of your trading portfolio.
Investing in Stocks: What to Look for in 2013
Stocks are a fundamental aspect of financial trading, even in a world of diverse financial products and high liquidity. Trading them can be challenging, however, so it is worth addressing their suitability as an investment option in the current climate: –
The Benefits of Uncertainty
While uncertainty is known to trigger market volatility, this can actually be positive for some investors. More specifically, macroeconomic instability can often trigger a fall in stock prices, creating reduced valuations that are enticing to experienced investors. This is especially true when the prices of established stocks fall, as a period of economic growth will soon drive these prices up towards their typical market level. If you have a long term outlook, then investing in low valuation blue chip shares can deliver significant returns.
The Global Market and its Benefits
While U.S., UK and Eurozone stocks may currently be under performing, this does not mean that this investment model is moribund. Instead, traders simply need to look further afield in their quest for profit, as developing economies in Asia, Central America and Eastern Europe continue to gain in popularity. China offer a particularly prominent example, as gathering economic gloom and negative data has diminished GDP growth and triggered record low company valuations. With growth expected to resume as the global recovery gathers pace, however, those who invested when stocks were low are set to make considerable gains.
Consider Market Alternatives
Whenever you appraise an investment option, you cannot make a sound decision without first considering alternative options. The financial market is awash with innovative derivatives and products, and each of these have their own benefits and drawbacks in the existing economy. Before you commit to investing in stocks and shares, it is crucial that you thoroughly evaluate the market and select an option that best suits your needs. Currency and precious metals are all viable alternatives, especially if you wish to maintain a diverse and profitable portfolio.
The Bottom Line
Regardless of your level of capital or investment philosophy, stocks represent a traditional trading vehicle that can deliver genuine returns. They are not suitable for everyone, however, as only those in the market for long term financial gains should look to invest their capital into global stocks and equities. To understand more about the stock market and alternative investment options, visit www.alpari.co.uk.