2018 is a strange year for people looking to invest in the market. The reason being that we are in a scary space with the vulnerability of the market, but to the untrained eye, the market seems like a wonderful place to be. Numbers have never been higher, growth seems to be continuing as the interest rates stay abnormally low, and even industries that used to be failing are starting to show signs of life again. So with all this great news, how is the market scary? Well, to answer that question, we put together a bit of stock advice on the major threats to market security and what makes them scary.
The Biggest Threats to Market Security
The Market is 40% Higher than Ever. That sounds like a good things right? Well, in many ways it is because it shows that our market is able to expand to heights like this, but in many ways it should scare you more than anything. The reason being, when markets reach new highs, they are automatically in a vulnerable state because it means they have surpassed the point of the last crash.
As the market continues to grow, there will be false boosts that start to show up around certain markets, and they are normally the markets that are focused on taking loans from the banks. Although loans help businesses get work done, they create debt for the banks and ultimately raise inflation rates. The result is a bubble of debt for the banks and the markets they are lending to.
Inflation
As we mentioned before, inflation is a huge threat to market security. The reason being, money is worth less. As the central banks start to print more money to hand out their loans, the overall value of a dollar decreases. This is due to more legal tender being in circulation than before. So what does this mean for the investor? Well, if the company you invest in is funded solely by loans, your investment could be in trouble should another banking default happen.
The inflation rate affects the people looking to invest too for the same reason as above. As the banks give out loans and raise the debt bubble, your money is worth less too. That’s right, the value of your money is completely out of your hands, and resides in the banks ability to balance the money in circulation and the debt bubbles. We saw how that went before, and it’s showing signs of doing it again.
The Rise of Dying Markets
As the market continues to grow, many industries that had been dying during the past few years are starting to bounce back. Although this is currently a good thing for the health of the economy, these industries have proven that they are going to fail, and the nature of their unsustainable products have already proved it. Though these industries won’t be leaving anytime soon, oil, coal, and other non-renewable resources have a clock ticking over their head as a reminder that they won’t be around forever.
As for now, the market seems to be rallying behind these markets, but from the look of the debt situation and banking attitudes, this will also be where the next major crash could take place.
World Threats
The world is big and scary place sometimes, and everyday the news reminds us of just that. From the Korean Nuclear tests to the School Shooting Epidemic we’re in, there are worldwide threats to market security that can really destroy what was once an unbeatable investment opportunity.
You don’t just want to look at the man made threats to the market however. Mother nature can deal blows just as big and just as devastating as bombs in a war. Natural disasters are extremely hard to deal with and the markets will reflect such an event. Initially, there will be tons of devastation and losses throughout the markets that are affected by the region that has just seen the natural disaster, but as the BP oil spill shows (not natural but a great example) and the hurricane clean ups, the economy will likely bounce back from different areas that help with the cleanup. So, just because one investment opportunity has died from a disaster, another might show up to take its place in the hopes of bringing everything back to balanced market growth.
Conclusion
At the end of the day, we are in a scary marketplace, full of threats to market security. But that doesn’t mean there isn’t ton of opportunity to grow as an investor. As a matter of fact, it’s almost as if we are in a market that is simply too good to be true, and that’s because in many ways, it is.
If you choose to hop into the investment game now, you will still be able to help yourself build a great portfolio, but don’t be shocked if you lose everything through poor investments and a market crash. If you are worried about the vulnerability of the market, most qualified financial advisors will agree that it’s best to wait for the crash. That is the ultimate time to “buy low,” and as an investor, that’s the best way to make a profit.
What market threats have you spotted in 2018? Do you think the market will continue to grow, or do you think the crash is inevitable? Share your comments below.