The Pessimist guide to 2019


If some people would say 2017 was the year of Bitcoin, it’s not farfetched to call 2018 the year of oil. That’s because since climbing to four-year highs in early October 2018, the price of crude futures has crashed by more than a third before the year’s end.

This type of volatility has inspired many traders to speculate on crude oil’s future price movements, but that’s not the only hot topic that was on the table. Whether it be a Trump’s trade war (and truce) with China or UK Prime Minister Theresa May’s Brexit vote, 2018 could also be dubbed the year of economic uncertainty.

This leaves us begging the question: What does 2019 have in store for us traders? If you are a pessimist, or as they’re better known on Wall Street, ‘bearish’, there is a lot to think about following New Year’s Day. In fact, the American Association of Individual Investor’s (AAII), bearishness is at its highest levels since February 2016. Additionally, the State Street Investor Confidence Index for North America (ICI) reached its highest bearish level since 2012.

So which assets are most pessimists looking at? Here are a few to consider.

The Dow Jones Industrial Average

In 2018, the index suffered its worst December since 1932. For you history buffs out there, 1932 was smack in the middle of America’s Great Depression. Could this be a sign of things to come? It depends who you ask, but meantime, this index could draw plenty of attention in the next year, as well as the CFD asset based on its movement – the US 30.

USD

Although the US dollar largely outperformed its counterparts in 2018, 2019 could have different plans in store for the greenback. A Reuter’s poll of foreign exchange strategists suggests that the USD might be ‘undermined in 2019 on increasing concerns about slowing U.S. economic growth’. Federal Reserve Chairman Jerome Powell said that U.S. interest rates were nearing neutral levels in late December, but former Fed Chairman Alan Greenspan told CNN Business that “investors should prepare for the worst”. So who should we believe – Greenspan or Powell? Greenspan does have more experience as a Fed Chairman than Powell and he is responsible for the quantitative easing, but the latter is far more likely to spread hints regarding his personal inclinations, and he is the one currently holding the reign.

Facebook

In 2018, it looks like lots of investors unfriended Facebook. The social network plunged 8.5% in December in a downfall that started in early 2018 during the Cambridge Analytica scandal. When that happened, Facebook revealed that they had been sharing user data with a British based political consulting firm. This quickly spiraled into Russians using Facebook to meddle in US elections to accusations of ‘fake news’. But Zuckerberg’s multiple apologies weren’t forgiven by Wall Street. The latest scandal came out in December when it was revealed that from 2010 until today, FB shared users’ private data, including private messages and contact info, with over 150 companies including Netflix and Spotify. It seems that every news regarding Facebook and user data results in a stock price drops. And since sharing user data is Facebook’s primary business model, there’s no knowing how or when this will end Additionally, as these revelations continue to come in and are viewed by the government as scandals, it will likely invite more regulation upon FB’s business model. This is compounded by the notion that the pro regulation Democrats have gained a more prominent presence in the US congress.

The bottom line

Although no one likes to be the bearer of bad news, sometimes, when it comes to investing, it is important to listen to the doom and gloom. Besides, when you trade CFDs with iFOREX, you can always choose to go short or long – Sell or Buy – potentially taking advantage of price change in any direction. Think that the price of an instrument will rise? Open a Buy deal. Think it will decrease? Open a Buy deal, and may 2019 be kind to your portfolio.

 

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