Four Profitable, Market-Moving Investment Trends
- When it comes to investing, many people focus solely on the U.S. stock market. But there are plenty of market-busting trends out there.
- Today, Nicholas Vardy identifies four trends and how you can apply them to your ETF trading system.
If you’re like most investors, you think only of buying U.S. stocks when you think about investing.
You may focus on the latest hot sector – whether it’s pot stocks or artificial intelligence – or just high-dividend stocks that pay you a steady income.
After all, U.S. stocks have been a terrific place to make money.
The U.S. stock market has trounced almost every other stock market on the planet over the last 10 years.
The Vanguard Total Stock Market ETF (NYSE: VTI) has ranked No. 1 over the past three, five and 10 years among the 44 global stock markets I track. This bet on the broad U.S. market even beat Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) over this period.
So why bother with foreign stock markets, gold, oil or complex bets on interest rates when a simple “buy and hold” strategy beats the best investor of all time?
I’ve argued as much in my recent article “In Praise of Simplicity.”
That said, financial markets do offer other opportunities for savvy investors to make money.
As The Oxford Club’s ETF Strategist, I evaluate all asset classes across all sectors. And here are four major potentially profitable trends that I see today…
No. 1: Interest rates are falling.
The world now has more than $15 trillion of negative-yielding debt. That means investors are paying issuers of debt to invest in them.
Trying to unravel the implications of this makes investors’ heads spin. And economists of all political stripes are debating the impact on the global financial system.
The truth is, no one knows.
The one thing we do know is that the long-term trend in interest rates is down.
That, in turn, means the rally in the bond market will continue. And the value of an asset that pays a positive interest rate will soar as well.
No. 2: Precious metals are soaring.
During times of economic uncertainty, the price of precious metals tends to soar.
After all, precious metals have always been a safe haven investment.
The prices of both gold and silver have broken out of long-term trading ranges in recent months. The same applies to lower-profile precious metals like platinum and palladium.
Precious metal investors have suffered in the world of quantitative easing. But with many of the world’s central banks stockpiling gold, the rally in the yellow metal may just be beginning.
The same applies to other precious metals as well.
No. 3: The tech bubble is deflating.
The bubble in publicly listed tech unicorns like Lyft (Nasdaq: LYFT) and Uber (NYSE: UBER) has started to deflate.
Both Uber and Lyft are trading far below their initial offering prices. The cult of Elon Musk is unraveling with Tesla‘s (Nasdaq: TSLA) stock down more than 26% this year.
The canceled initial public offering of WeWork was a slow-motion train wreck. Led by another charismatic leader – Adam Neumann – this debacle may have signaled the death knell for many of tech’s unicorns and their questionable business models.
As Peter Drucker observed, the boom’s heroes become the bust’s villains.
This time is no different.
No. 4: The “China miracle” is imploding.
China has been the world’s economic wunderkind for the past two decades.
But the pace of China’s growth has stalled. Chinese banks are starting to go bust. Exports are plummeting. Chinese investment abroad is falling.
The economy is suffering under the weight of crushing debt. And the political crisis in Hong Kong is revealing the true intentions of the Chinese Communist Party.
Few U.S. investors made any money by investing in the China miracle when times were good. They will make more by betting against China when times turn bad.
About Nicholas Vardy
An accomplished investment advisor and widely recognized expert on quantitative investing, global investing and exchange-traded funds, Nicholas has been a regular commentator on CNN International and Fox Business Network. He has also been cited in The Wall Street Journal, Financial Times, Newsweek, Fox Business News, CBS, MarketWatch, Yahoo Finance and MSN Money Central. Nicholas holds a bachelor’s and a master’s from Stanford University and a J.D. from Harvard Law School. It’s no wonder his groundbreaking content is published regularly in the free daily e-letter Liberty Through Wealth.