Strategies For Success In Uncertain Times
The world is facing an unprecedented, uncertain economic situation. During previous periods of economic instability, there have always been, at least to some degree, methodologies used to minimise the financial disruption faced.
The only certainty the economic sectors face is uncertainty. This is a situation which leaves only one route for predetermined success: diversification. More than ever before the importance of portfolio diversification cannot be understated.
Fortunately, many options are easily accessible, such as the option to buy bitcoin with Visa or investing in largely unaffected sectors, such as privatised medical industries. Here are five tips to consider when diversifying your portfolio.
Property Never Fails
Even though landlords are experiencing challenges due to tenants claiming ‘force majeure,’ the long term value of the property is estimated to retain a steady investment growth. Industrial property remains a substantial investment while private properties, housing etc. ensure good returns and lower risk of force majeure passing as a president for non-payment.
In some countries, the real estate market is reopening to lower demand than the same period of 2019. In the UK restrictions on the real estate market were recently lifted, with properties listing below market value. This is likely to be a market norm across the globe.
Considering those as mentioned earlier, this may be the best time to invest internationally. Additionally, with some countries facing high repo rates, properties are going on sale far below market value. The key is to research details on prospective property prices in any given country’s economic acclamation to make an informed decision.
Invest With Caution
The old norm is precisely that. Investments that were once fail-safe bets may now be on the precipice of collapse. When looking to expand your portfolio take a close look at disruptive industry startups.
The critical factor that determines the success of a ‘disruptive’ investment opportunity is feasibility. An example of disruptive technologies that led to financial gains is Netflix (and similar services), where an entire industry is fundamentally and irreversibly changed.
In contrast, and perhaps surprising to some, a company like Uber is not considered as ‘disruptive’. The distinction is that while Netflix changed and shaped a new industry, Uber streamlined an existing industry.
Although both are multi-billion dollar companies, the investment opportunities surrounding the entirely new industry created in the wake of digital streaming were far more lucrative than the mere restructuring of traditional taxi services.
Finding Market Stability
Aside from original investment look into commodities that are not affected by international lockdowns. Some e-commerce platforms, ISPs and information technology industries are flourishing amidst the chaos.
Gains in terms of traditional investments are less lucrative here. Instead, you may want to look at opportunities to invest in companies subcontracting to these service providers. A registered and well-structured logistics or construction startup aiming to facilitate the provision of said services may offer high returns for shareholders.
In addition to the tactical investment, experts caution against ‘underdog investments’ in the more stable market sectors. These sectors will almost certainly be dominated by the market leaders, with only the smallest probability of disruption.
Cryptocurrencies Face Less Uncertainty
As the cryptocurrency markets start to mature and stabilise, there is a measurable certainty to investments. It is by the fundamental nature of cryptocurrencies that their long term value is undeniably as secure and safe when compared to more conventional investments.
Cryptocurrencies and more specifically blockchain crypto has seen a spike in value and demand since December 2019, in almost direct contrast to the dip seen in the S&P 500 index of over 10% over the same period. Analysts do caution against some of the lesser-known cryptocurrencies. Experts have also cautioned vigilance amid cautious optimism.
The Future Of The Tech Industry
The tech industry has proven its resilience by maintaining relative market stability. Although all sectors have faced falling share prices, the top tier of the tech industry has shown minimal fall in value and has, in some cases, thrived.
Facebook, as an example, faced a dip in valuation during March 2020 but bounced back achieving a record high trading at 234,65 (25 June 14:48 EDT). Similar trends are reflected across the board in Silicon Valley.
With the tech industry leaders already trading at record values, it may be more lucrative, if somewhat riskier, to look towards startups offering more significant margins for growth. According to industry experts, the most critical developments in the industry include artificial intelligence and quantum computing. It is, therefore, likely that the billion-dollar startups of the future will be born in these sectors.
With more automation required both now and for the foreseeable future, finding the right machine learning or A.I. startup may be the most lucrative investment of the economic age. Consider as examples the burgeoning industries of self-driving cars, dynamic automated production and A.I. medical diagnostics.
Monitor, Rethink, Restrategise
Perhaps the most echoed advice from finance professionals is to be vigilant. That is to say; you have to monitor financial trends and developments continually, looking into potentially lucrative possibilities. This effort is what uncertainty requires, to think on your feet, and in securing and diversifying your portfolio, you stand the highest chance of success.
In closing, we must caution against investment in companies claiming long term returns in the medical sectors that focus specifically on the provision of Covid-19 supplies. With a vaccine in the final stages of testing, this will be a volatile and ever-changing temporary market.
There is almost certainly going to be an influx of temporary industries claiming long term gains. These are not sound investments; they are, however, the reason that one must scrutinise every investment opportunity, making sure you are not being conned into a fly-by-night cash grab.
The overall consensus is that there are opportunities, amidst the pandemic, as well as in its wake. Such opportunities that will create wealth and opportunity for new, dynamic markets to emerge. Markets are armed with research and market knowledge, there is more than just the prospect of financial security to strive for, but that of actual economic growth.