During volatile times like these, amid stock market run-ups and rapid drops, global virus pandemics, downright hostile political fights leading to an historic presidential election, a weak Federal Reserve, and other factors, it’s smart to avoid direct purchase of shares. Many investors seek the safe haven of contracts-for-difference (CFDs). That way, they don’t have to hold volatile assets.
CFDs are versatile, simple, and ideal for individuals who want to make predictions about which way the market, or a particular stock, is headed. If they guess right, they earn a profit. For Canadians who want an easy way to invest without enduring all the hassles of stock ownership, it’s as easy as choosing a Canada-based CFD broker and opening an account. After that, it’s easy to begin trading immediately. What are the factors that make late 2020 an inopportune time to get involved in traditional share-buying? There are dozens, but the ones getting the most attention from the financial media include the following.
The Federal Reserve Board, which sets interest rates and directs U.S. monetary policy, has nearly run out of tools to whip the economy back into shape. Its recent setting of historically low interest rates, and an announcement that they don’t intend to raise them for at least another year, probably marks their last effective move to enhance the markets. That means if the U.S. financial picture continues to deteriorate, the government’s major monetary agent will be nearly helpless.
There’s been plenty of talk about a COVID vaccine and it now looks like at least two drug-makers are poised to introduce one by year’s end. Previous attempts have met regulatory stalemates or trial failure in early testing. If any of the current round of vaccines turns out to be a dud, investors could lose the last bit of confidence they have in a stock market that is already flying a bit too high. That could mean a major correction if a failed vaccine rollout becomes reality.
COVID virus statistics were improving for several weeks in a row, but there have been recent surges in several U.S. states. If the pandemic hangs on, remote working is the norm, and business shutdowns continue through the end of 2020, watch for Wall Street to react in a very negative way. Before the virus hit, the economy was in excellent shape. It only took four months of economic shutdown to wipe away all those gains. A second round of coronavirus could mean a knock-out blow to the entire financial infrastructure of U.S. markets.
The Vehicle Loans
One of the first segments of the economy to suffer in times like the present is auto loans. Given a choice, most people would rather miss a few car payments than house payments. Since March, car loan defaults and repossessions have been at an all-time high. An extended season of COVID-related financial negativity might be the last straw for an industry that is already as strapped as it can be. Keep an eye on auto industry news to see how the sector performs in the final months of the year. If it’s able to pull out based on an uptick in income and fiscal well-being, then we may have turned the corner, but don’t count on it.
The Election Chaos
As a group, major investors don’t like uncertainty and tend to wait things out. In this case, the upcoming U.S. presidential election marks an even of historic significance. It’s not only one of the most partisan battles in a half-century, but appears to be holding of a fresh inflow of funds to the economy.
The September Curse
September tends to be a down month for the stock market, which is just one reason so many careful investors bolster their portfolios with gold bullion during the final month of the third quarter. But the fact that all this bad news is peaking during September is not good. It’s like tripping down the stairs and breaking your leg when you already have a bad fever and a black eye. The September blues won’t help a securities exchange that is struggling as much as it ever has.
Trend-watchers don’t like the fact that share and index prices are at an all-time high. If you already were in before the big run-up, you made out well. But what happens from here on out? Is it possible for Wall Street to continue notching new highs through the current chaos and uncertainty? The bottom line is that late 2020 and early 2021 are almost certainly not ideal times for investors.