Trying to predict investment opportunities for a year or two into the future is not an exact science. The standard warning that goes with such forecasts is they are educated predictions, and there is no guarantee they will occur. However, as I share my forecast with you, I’ll explain the thinking that goes into it.
This is for those of you who are sitting on a good amount of cash. You may be an individual or a company with the pleasant problem of deciding what to do with your money. You might find yourself continually asking, “Should I invest my money or hang onto it? And if I invest, where should I put it?” After all, the goal of an investment is to preserve what you are investing, while receiving a good return off it.
As everyone knows, the stock market has been perking steadily upward for more than a decade. It seems like an extremely attractive vehicle to place your money. While history gives no indication of future performance, those who do not learn from history are doomed to repeat it. In its past, the New York Stock Exchange has seen several streaks where the stock market continually rose. One was from 1949-1956 and resulted from World War II concluding and America starting its march to becoming the most robust economic machine in the world. A couple others occurred in the 1980s and ’90s, when new federal laws governing investments, savings and pensions infused a great deal of money into the market. The latest is from 2009-present and came about after the market meltdown of 2008. Much of the current streak is the result of very low interest rates as the Fed cut those rates to historically low levels for a long time.
The previous upward trends, and any other little streaks the market had, all have one thing in common — they ended. Some ended with a bang and a crash, while others were more of a bull market turning to a bear market. I don’t think we are going to be heading into an economic recession with a resulting market crash or major correction anytime soon. However, there is one factor affecting the stock market that is unpredictable and, I believe, has a more significant impact on its performance than ever before.
I am talking about politics, both the national and international variety. Whatever your opinion is of President Trump, the stock market should stay steady throughout 2020 and into 2021, at least, if he wins re-election next year. If the Democratic candidate wins, the stock market will probably take a negative hit, at least initially. Investors would then have to see what type of economic policies the new administration formulates to get an idea where the stock market will go from there.
The policies of whomever is president as they deal with trade and relationships with other countries will also have a bearing on the nation’s economy. Every time trade with China is in the headlines, you see a bounce or a dip in the stock market depending on the type of news. Wars and conflicts can also crop up at an alarming rate, and when that happens, all forecasts get thrown out the window until the situation stabilizes. Unfortunately, we live in a volatile world, and there is no sign of that abating in the future.
Overall, I believe the stock market will continue to rise, but because of the political volatility the nation is experiencing, there are going to be some peaks and valleys with moderate growth. Fixed investments continue to see a low yield and low interest rate environment. While their rate of return might not be stellar in the economic conditions that favor the stock market, there are ample opportunities to invest in things like general account portfolio of life insurance companies and other specialized fixed items, such as short-term private lending and mezzanine debt, due to their availability.
The economy still appeals to the bulls. For bears, low interest rates make it difficult for those who receive a fixed income on conservative investments. Those same low interest rates set by the Fed that spurred the current bull market have slowed the growth of some other investments.
The bottom line is the economy looks good for the next couple of years. I don’t think we will see a recession. That being said, I urge great caution for anyone considering a major investment right now. The potential effect the political environment in the United States can have on the stock market and other investments is a wild card you cannot ignore. If you are sitting on money to invest, it would be wise to keep sitting on it. Even with a still rising economy, keeping money liquid for future investments is a good idea. Even if the political dust clears after the 2020 election, it might not be until 2021 that the picture will clear on the best places to put your cash.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Brown Bolsters Student Financial Aid After 52% Investment Return – BNN
(Bloomberg) — Brown University will expand financial aid for students with fundraising gains and returns from its endowment, which led the Ivy League in investment performance, with a 52% increase. The school will increase scholarships for moderate-income students and develop a college-preparatory program for students in its hometown of Providence, Rhode Island, among other initiatives, according to a statement Monday. Brown didn’t detail how much will be spent on the programs. The endowment contributed $194 million to the university’s operating budget in fiscal 2021, Brown said in a statement Monday. “The university has an enduring commitment to ensuring that talented young people can afford to come to Brown, regardless of their socioeconomic background,” Brown University President Christina Paxson said in the statement. “We are fortunate that strong financials provide us with a rare opportunity to make new investments in cultivating the next generation of leaders.”
Because Brown’s endowment contribution to the university’s operating budget is based on average market value over the previous three years, the investment returns contributed in fiscal 2021 are expected to steadily increase in each of the coming years, the school said Monday.
©2021 Bloomberg L.P.
Mastercard expands cryptocurrency services with wallets, loyalty rewards
Mastercard Inc said on Monday it would allow partners on its network to enable their consumers to buy, sell and hold cryptocurrency using a digital wallet, as well as reward them with digital currencies under loyalty programs.
The credit card giant said it would offer these services in partnership with Bakkt Holdings Inc, the digital assets platform founded by NYSE-owner Intercontinental Exchange.
Founded in 2018, Bakkt went public earlier this year through a $2.1 billion merger with a blank-check company. Shares of the company were up 77% at $16.19 on Monday.
Mastercard said its partners can also allow customers earn and spend rewards in cryptocurrency instead of loyalty points.
The company had said in February https://www.reuters.com/article/us-crypto-currency-mastercard-idUSKBN2AA2WF it would begin offering support for some cryptocurrencies on its network this year.
Last year, rival Visa Inc had partnered https://www.reuters.com/article/us-blockfi-crypto-currency-visa-idUSKBN28B603 with cryptocurrency startup BlockFi to offer a credit card that lets users earn bitcoin on purchases.
Bitcoin, the world’s largest cryptocurrency, touched a record high of $67,016 last week after the debut of the first U.S. bitcoin futures-based exchange traded fund. It has more than doubled in value this year.
(Reporting by Niket Nishant in Bengaluru; Editing by Ramakrishnan M.)
EU makes first investment in hyperloop – GCR
Dutch engineering spin-off Hardt Hyperloop has been awarded €15m by the European Commission, the first time that the EU has directly funded the development of the ultra-fast transport concept.
The grant was disbursed by the European Innovation Council Accelerator to help the Dutch engineer and its partners continue research and development.
Tim Houter, co-founder of Hardt, said in a press statement that the decision was a vote of confidence in his company and the technology.
“It’s great to have now gained the trust of the European Commission. Their support will help to accelerate the development of a European hyperloop network, bringing us much closer to significant carbon dioxide savings. European cities will be connected smarter, faster and cheaper.”
The funding will also progress the European Hyperloop Centre in Groningen, set to demonstrate lane-switching for a high-speed hyperloop system in 2023.
A pilot project to move freight between Amsterdam and Rotterdam is being investigated by companies, governments and network organisations. Houter said he hoped the route could be developed in the Netherlands within this decade.
The EU is particularly interested in hyperloop because of its fit with the European Green Deal, and the commission’s strategy for sustainable and smart mobility. According to Houter, a European-wide network could save 160 million tonnes of carbon on an annual basis, which would be “more than the entire emissions of the Netherlands”.
Hyperloop pods move autonomously through low-pressure tubes, propelled by fluctuating magnetic fields supplied by the “track” they float over.
Hardt Hyperloop was founded in 2016 by engineers at Delft Technical University. It was involved in building Europe’s first high-speed test facility, and has developed a lane-switching technology that is reckoned to be essential to the development of networks.
Its partners include Schiphol Airport, Nederlandse Spoorwegen, Deutsche Bahn, Koolen Industries, InnoEnergy, Freigeist, Bam, Tata Steel and IHC.
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