Oil Crashes, but Stocks Rise

It's April 27^th 2020 and an unprecedented time.  The oil markets have collapsed.  The price of oil went negative for the first time ever.  It was something most people thought was a mistake when looking at the charts. I seriously couldn’t believe my eyes when the line dropped below zero and the effects it will have on our economy will be seen for a long time.  Many people are glad to see gas prices drop locally, but the impact may be worse in the long run for the average citizen.  But was this the reason that the stock markets made a rally today?  Was that a needed outlier that was part of the incline in the US stock market?

Most likely the 30% decline in oil did not cause stock markets to rise. Instead finally the Federal Government and many local State Governments are talking about reopening the local economy’s and markets.  This is bringing hope and confidence to the investors.

Across the pond so to speak the markets are possibly going to be opening up as well. France, Italy and even New Zealand are starting to loosen restrictions and bring back their own economy in a small way.  Every little bit helps and if they are able to stay safe and contain the Covid-19 pandemic and increase their economic output they are going to. In times like this the markets are flocculating widely and traders are making lots of profit. Companies like American FX Capital are trading at all time highs and gaining huge percentages on their portfolios.  Not everyone has the foresight of a market research company though and we are riding the ups and downs with a little less clarity.

It seems that the local talk from different states governors about how to loosen the social distancing restrictions has given some confidence to traders.  Many of the strictest states like Michigan, Virginia and New York are finally discussing a solution to the problem and are working on getting the many small businesses back to work.  At this point it seems like many of the states are simply waiting on another state to make the first move.  Everyone wants to track the data of how effective the loosening measures are going to be and if they will end up flooding the hospitals to past capacity.  It is a game of chicken and the citizens' lives are at stake. As per the normal we are only talking about the market as we see it and not giving financial advice.  Please see your local broker, investment firm, or attorney for financial advice.

Investing for the long haul

Whenever I hear the word investment, I find that most people are talking about retirement.  In fact that is the idea that pops up into most people's minds and that is the only reason why they even invest.  The idea of putting away a significant portion of your money only for retirement sounds a little strange to me.  Why not invest to increase your income currently?  There are lots of ways to invest.  As a matter of fact there are tons of different markets that each entail thousands of companies with multiple different ways to spend money in hopes of getting a greater return with your money.

So what is a more wise way to invest your money, short returns or long returns? It is a complicated question that even the most successful companies that play long and short returns like American FX Capital who succeed in both areas will not give a definitive answer.  They will simply say the most profitable route.  Sometimes that is a quick turnaround trade of a few days, and sometimes that is a long hold trade of a year or more that gets the return they were seeking.  So as a normal American worker, what type of length of investment should you look for.

I would say it depends on your age and your goals.  I have known many individuals who just lost 25-45% of their entire investments twice in the last 12 years.  The 2008 market crash destroyed their portfolios and yet again with the 2020 Covid-19 Pandemic.  If you are nearing retirement and don’t have enough money to live on, then some times instead of buying very safe slow investments like an annuity many people are taking lots more high risk stocks instead. 

The losses that people have experienced have changed the game in their later years.  Where normally when you near retirement you don’t have the money to lose if the market goes bad so you make safe investments that are less likely to lose money, but won’t gain as much interest either.  Now since people have lost so much they are desperate to make more and risk has taken on a better look for them.

So the short term higher risk is looking more enticing these years for the individuals nearing retirement.  Where on the other hand younger individuals are seeing lots of opportunity for long holding investments because of the market crashes.  Each has many risks because a long hold is still subject to the same crashes that just occurred in the last 12 years.  So invest well and seek professional financial advice from your local broker, investment firm, or attorney.  We are only talking about the market as we see it.  Stay safe and stay profitable.

What is happening with Hedge funds

This year has been a particularly challenging one for most individuals who are invested in some way in the US and Global Markets.  The COVID-19 Pandemic has created one of the most volatile markets of all times and economies are being partially shutdown.  It has caused the US stock market to fall around 30% and Hedge Funds across the world have seen a grand fall.

Investors have pulled 33 Billion dollars from hedge funds globally in the first quarter of 2020.  That number is truly staggering. This is the largest outflow of funds since 2009 in q4 where 44 billions left in outflows after the crash.   It is truly a staggering number since performance-based asset losses of $333 billion seen during this period.  Which means that hedge funds actual capital declined to 366 billion.  This is a staggering amount and now the market has fallen below three trillion for the first time since 2016.  It is interesting since market research companies like American FX  have been making one of their most profiting years by trading rapidly in the markets.  Not everyone is feeling this optimistic or knows how to traverse markets when they turn in down flow.  Hedge Funds are simply bleeding cash as people are pulling out fast.

This has led to great volatility in the market.  The volatility is also an amazing opportunity for playing shorts in currencies, another area that American FX Capital has been known to have been very successful in.  Even with Hedge Funds being shorted by this amount the market is still ripe with opportunity.  It is the knowledge base of understanding where our country is in the credit cycle that allows some companies to thrive in times like this.  The saying what goes around comes around is what some companies live by.  This means that financial crises have happened before and in general all happen in similar ways and follow similar paths.  

By understanding the intricacies of what has happened in the past, one might say you can predict what will happen in the future.  Money, and credit all work in the same flow even if the mechanisms that we use are a little different. So some market research companies are beyond history buffs and have mapped out the in depth workings of the credit cycles and can predict where we are and where we are going.  As per the usual we are only talking about the market as we see it and not giving financial advice.  Please see your local broker, investment firm, or attorney for financial advice.