In the year 2020, the world economy is teetering dangerously close to a recession. This is a time when investors have learned that it is more beneficial to hold the stocks of companies that are poised to grow rather than those that have peaked or dropped. Stock prices may turn defensive at this time.
As stocks rise, the world economy is also poised to face worsening political and economic problems, such as those in the Middle East, which will end up on the international front pages for quite some time. Investors who are looking to buy stocks at a time like this need to be able to identify when stocks are turning defensive and looking for other opportunities.
There are several indicators that may indicate if a presidential election is pending and these include the national debt, unemployment, tax receipts, consumer confidence, oil prices, international tensions, public opinion, and the stock market. These are some of the things that investors should be paying attention to as the election approaches.
The debt of the United States is something that can cause a defensive stock to move. During periods of severe unemployment, there is less money available to make large purchases of stocks. If a new president takes office, the ability to take on debt will be a problem, though an optimistic assessment might be that the new president can pay down some of the debt that was incurred during the time of the previous administration.
Unemployment in the United States has risen during the past year, although unemployment in Europe has declined. The improvement in the world economy may result in a decline in interest rates on long-term bonds in the United States. By reducing the amount of money that needs to be borrowed, interest rates will go down.
If bank deposits are reduced in the United States, there is less money available to purchase stocks. Many investors who are interested in holding stock in companies that are doing well may have to look at investing in companies with high growth potential.
In the short-term, industrial output in the United States and Europe is growing at a slow pace, but there is evidence that this will be a trend that will continue over the next few years. The type of stimulus that the European Union can provide to help its manufacturing industries will be a positive influence in the United States as well.
In the stock market, it is always important to look at trends that are not going to last very long. Take a look at the bank owned stocks of oil companies, and other companies that have been struggling for many years. These companies have been reluctant to invest in anything that can negatively affect their stock price.
They will be more likely to spend money on expanding production lines, research and development, and other aspects of the stock market that will produce more cash flow for them in the near future. These types of stocks will rise if the economy picks up, but they may drop sharply if economic conditions deteriorate.
When the U.S. presidential election comes around in 2020, many investors will be watching how the stock market reacts. If the market continues to increase in value and supply, there may be no way to stop it.
Those who are expecting a rally in the stock market due to President Trump’s policies may find themselves disappointed. But the best part about investing in stocks is that you have a chance to catch a rising stock before it crashes.