Global stock indexes have been caught in an extremely volatile market since the turn of the decade, with investors focusing last year much more on the trade war between the US and China than on any other trade-related event. But the ink has hardly dried on this year’s “phase two” trade agreement between these two countries when the whole world changed radically with news of a major terrorist attack in New York.
As stocks of every country, and also the world as a whole, dropped, stock indexes across the board didn’t budge. The fact that there was no obvious culprit or explanation as to why the attacks happened, in addition to the fact that they were on one of the busiest city streets in the world, did not help matters. Even after an apparent confirmation by US authorities that it was indeed a terrorist attack, global stock indexes remained virtually flat throughout the entire day.
It is clear that the number of global stock markets will continue to decline, and that investors are finally starting to take note of this reality. However, it does not necessarily mean that we are going into a new recession. Many analysts believe that the current decline is simply the result of the economic slowdown being experienced worldwide, which caused many investors to become more cautious about their investments.
As more investors become more cautious, fewer people are willing to invest, and the number of global stock markets will be further reduced. This means that there are a large number of shares that have lost all or most of their value. It’s also important to realize that while a company may drop a few cents in price when trading closes, it will still end up having its market cap increased as well as its share count. So the effect of a single drop in share prices can be much greater than the loss in revenue.
While investors will not be able to enjoy the same level of stability in their investments as they were before the global economic turmoil, they can still make money by following their favorite stock indexes closely. Here are some of the best guidelines for investors who want to keep track of this critical market event:
Investigate the financial statements of companies that you believe are poised to experience some kind of significant growth. Over the past several years, a number of top-rated emerging market economies have emerged around the world, including Brazil, Russia, India, Turkey and South Africa. If you can find one of these countries listed on a stock index, chances are that it has great potential. Investigate the financial statements of the countries that have signed free trade agreements with each other as well, especially when discussing investment opportunities. When you are buying a stock from any country with which you have free trade agreements, don’t forget to investigate whether that country’s government is providing incentives to local businesses by requiring them to sell certain goods or services.
Be sure to take a look at how your chosen country’s economy is doing in the past and what impact international trade has had on its economy. When examining the economic reports of a country, keep in mind that the U.S. economy is a major factor in the country’s overall performance. If a country’s economy is not performing as well as it should, then this could be a sign that the country might be headed toward recession or even bankruptcy.
Investigate the political climate in the country in question as a potential sign of a stock market crash. There are a number of countries that may not be stable, and many of them are in Europe, where the political landscape has been rocked by several governments during the past decade. However, if you see any signs of impending political chaos in a country, do not invest that particular country’s stock shares. The political environment can change at any moment, and it would be foolish to put your money in a stock that is expected to follow suit.