Geopolitics And The Rise And Fall Of The December Stock Market
A week can be a long time in politics, but that’s nothing compared to a week in the stock market.
The two are closely linked of course, as we saw when markets dropped on 11 December after, as reported in CNN Business, US President Donald Trump had a very public argument with Congress leaders Chuck Schumer and Nancy Pelosi. Trump threatened to shut down the government unless Congress funded the building of the much-spoken-about wall along the US-Mexico border.
Optimism about the US-China trade deal didn’t quite halt a slide in Dow companies with exposure in China – CNN noted that Apple, 3M and Boeing were all lower. Their slump comes perhaps on the back of the trouble with Chinese tech company Huawei and the arrest in Canada of Huawei Chief Finance Officer. President Trump has suggested that he’ll intervene if that will help the US reach a trade deal. China is doing its share, with Stansberry Research noting suggestions that the government is willing to cut auto import tariffs and encourage more foreign investment.
Impact on European Politics
European politics is also having an impact. As reported by Marketwatch, Italy is reconsidering its draft budget, which made its bond market more appealing to investors.
Brexit is still making for difficult investment decisions. UK Prime Minister Theresa May was still the PM on 13 December after a vote of no confidence, but the challenge hasn’t resolved any of the pending questions about whether her unpopular Brexit deal will be ratified or what happens if it isn’t.
As unpredictable as all of this seems, one investment rule holds true: successful investment is about planning for the long term. The stock market is always a risk.
Discovering The Best Approach
As the commentators at BullionVault recommend, the best approach is to avoid impulsive decisions and look at your long term strategy. (If you don’t have one, it might be time to make one.) Build your portfolio slowly over time, which will help to even out fluctuations in the market. Seek to build a diverse portfolio and look for dividend-paying stocks in growing industries that might be undervalued due to some of those volatile but ultimately short-term geopolitical events.
And always ask an expert on how to do all of the above.
If you would like to speak with a professional investment adviser about how your portfolio is positioned for the year ahead, contact United Global Capital today on 03 8657 7640 or email [email protected] for a no cost, no obligation consultation.
Photo Credit: The White House