Can You Outsmart the 2022 Stock Market?
The global securities markets are nearly in bear territory, which is officially defined as a 20 percent drop in overall values. Whether the indices reach that level in a week or a month, there’s general agreement that the balance of 2022 is not looking up for the equities markets. But how should individual traders and investors view an inevitable downturn? Do lower prices mean that all bets are off and that it’s best to avoid trading until things turn around?
Of course not. In fact, many traders don’t care a whit about which direction the economy or the securities markets are headed. The main thing they want to do is predict prices in advance, up or down. There are many long-term advocates who, similarly, don’t worry about bears or bulls. Their concern is that the extreme long-term price levels go up, which has been the case for decades. So, while the talking heads on television philosophize about what declining prices for corporate shares might mean for consumers, savvy investing and trading enthusiasts are always studying the landscape for bargains and opportunities.
If you’re the type of person who regularly makes transactions on your favorite brokerage site, it’s essential to review the recent developments in the marketplace and figure out how to unearth a few excellent opportunities as 2022 moves into its final two quarters. Individuals who are new to the markets can work with a broker who offers CFDs (contracts for difference), do a quick MT5 download, and get into the fast-paced action of the year-end securities markets. Here are some of the opportunities to look for and suggestions for taking advantage of them in the most efficient way.
Overview of the 2022 Situation
Since the year began, most of the world’s major indices have lost close to 20 percent of their value. It’s important to remember that a financial index only reports averages, not individual stock or corporate fortunes. However, it’s safe to say that the global economy is not headed for a long period of growth and expansion. After the Russia-Ukraine war got underway in February, petroleum and other critical energy assets began to experience price increases. Even now, oil and several related commodities are standouts when it comes to price changes. Most of the other sectors have witnessed downturns.
Several factors have contributed to the current state of the markets, notably the European war, widespread inflationary pressure in developed nations, inflated oil prices, shortages in several consumer product niches, a continuing logistics snarl that’s stressing supply routes, a faltering US economy, and a breakdown of the Chinese domestic production system. How can a volatile economic situation and global financial chaos offer investment opportunities to individuals who only invest part-time from their homes or as a second job? Fortunately, it’s easy enough to short sell various assets and aim for profits when their prices go down. Likewise, using CFDs to predict either rising or falling prices is one way to benefit from all types of markets.
One of the many advantages of CFDs is their versatility and very low price point. People can opt to use or not use leverage and can place as much or as little of their capital at risk as they wish. Plus, you don’t have to expose your account to asset ownership because CFDs are contracts, not hard assets or shares of stock. If you think XYZ Corp’s shares are about to tank, you could use a CFD to predict the fall in price and would stand to earn a profit if prices indeed declined.
Other opportunities include stocks that are connected to the petroleum industry, either as refiners, drillers, or storage facilities. Some of the mid-2022 corporations that are standing out from the crowd are likely to weather the storm of a potential bear market. Even if the Russia-Ukraine war winds down soon, it’s possible that the price of oil will enjoy support due to scarcity and supply chain backups.
Market analysts sometimes overlook the potential for cryptocurrency to come bouncing back from its recent downfall. Crypto is anything but predictable and, even in the best of times, demonstrates high levels of volatility. But there’s a twist to the cryptocurrency situation that is unique in many ways. In the past few years, bitcoin and other leading altcoins have served as a diversification asset for many portfolios. Additionally, there is something of a safe-haven effect at work when disgruntled share owners sit out a bear market and park at least a portion of their capital in crypto assets. Due to the sector’s reputation for unpredictability, it could recover long before the traditional securities exchanges do.
This article has been published in accordance with Socialnomics’ disclosure policy.