Share:

I believe the worst of the ongoing crisis is behind us. Over this time, we have experienced personal loss, price spikes, market crashes, health disasters and geopolitical shocks. To be more specific, since 2017, the markets have been affected by several crises and shocks that have dramatically affected our lives, crushing currencies, crippling economies, and causing many businesses to shut down. Some of these crises have affected the markets more abruptly than others and here following I cover some of the most notable impacts of recent and ongoing crisis:  

  • President Trump trade war with China which caused prices raise for basic products across the globe.

  • Global pandemic that killed over 6.5 million people and caused $9 trillion of GDP loss in 2020 (10 % of global output).

  • Climate and technology shocks costing the global economy respectively 280 billion in 2021 due to natural disasters and affecting shipping prices across the board due to the Suez Canal accident.

  • Russia war in Ukraine killing thousands of people and threatening peace stability in Europe for the first time since WW2 and energy security. Ukraine reconstruction cost to date is estimated at $ 1 trillion this is 5 times Ukraine’s 2021 GDP.

  • Skyrocketing inflation at a 40 year high at 8-9% in the EU and the US eroding welfare of people particularly the most vulnerable.

  • Global recession which in 2022 alone has wiped out 30-50% valuation of stocks and companies inflicting grave pain to investors and households.

While several of the above crises are not fully under control, we have managed to overcome the worst consequences of these shocks, and people and companies have built resiliency and proactive risk management capabilities. What we have also built is a higher level of risk awareness and readiness that will allow us to be better prepared for future unexpected events, be it a climate disaster or an unpredictable economic shock. For instance, supply chain recent shocks caused by geopolitical uncertainty, and climate risk, have pushed many companies to be more focused on multi-sourcing rather than sole sourcing. High inflation is leading to unprecedented interest rates increases, and the unlawful invasion of Ukraine has triggered heavy sanctions on the Russian state and Central Bank.  

You are the best stock to invest in

While participating in the Berkshire & Hathaway shareholders meeting in May 2022, a young lady from the audience asked the billionaire investor Warren Buffet. “You have been very good at picking good stocks. Which stock should I invest in given the ongoing crisis”? Warren Buffett responded.”  You are the best stock you can invest in”. What Mr. Buffett means that by investing in yourself you will reach the exceptional expertise you will need to succeed in business and in life. Warren Buffett is also known for leveraging every crisis that occurred by using his large cash balance saved to acquire underpriced stocks (battered by the market fear) that led to massive returns.  The message here is to accumulate savings as liquidity is king, particularly during economic downturns. He also once famously advised investors to be “fearful when others are greedy, and greedy when others are fearful."  

Investing during a time of crisis such as the ongoing one is no doubt risky, as we are still completely unsure about what kind of recession is coming, whether the Russia- Ukraine crisis will be long lasting, and whether prices will continue to rise. A protracted recession followed by stagflation is a real possibility and attempting to spot the bottom of the market is mostly guess-work and luck. However, if we stay away from the daily noise, and focus on long-term value creation and personal growth you will position yourself for early wins as the global economy starts recovering.

Sectors to watch

As the tail-end of this crisis shapes up, we believe there are rewarding investment and business opportunities in digital transformation, decarbonization and green- growth. These investment trends will shape our lives and will generate opportunities. Those joining these trends will benefit from the rapid market transformation that is ongoing regardless of the crisis.  Just to give you some background, green tech investment alone is expected to reach $5 trillion by 20250, representing the biggest investment shift ever experienced by markets.   

Conclusion

Investor psychology predicts that people tend to overreact during crises, both to the market downside and the upside, so maintaining operational routine, continuing learning, and performing due diligence will help you identify lucrative investment opportunities. Profiting from investing during a time of crisis requires patience, good judgement, and focus, and ideally a solid liquidity base to make opportunistic purchases and investments. While you do your market due diligence to spot opportunities, invest in yourself as this remains the most effective strategy to outperform your competitors.

The information provided by Empower Capital is for general information purposes to foster the dialogue and the discussed topics. All the information on these articles are provided in good faith. However we make no representation or warranty of any kind, expressed or implied regarding the validity, adequacy, accuracy, completeness, and reliability of any information provided.

Editors’ Picks

EUR/USD defends 1.0800 amid risk-aversion

EUR/USD defends 1.0800 amid risk-aversion

EUR/USD is holding ground above 1.0800 in European trading on Friday. The pair, however, stays undermined by the recent strength in the US Dollar on strong US PMI data and hawkish Fed expectations. Mid-tier US data and Fedspeak are next on tap. 

EUR/USD News

GBP/USD recovers to 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD recovers to 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD is trading close to 1.2700 in the European session on Friday, recovery ground after a brief dip, fuelled by a bigger-than-expected decline in the UK Retail Sales data for April. The pair remains on a corrective decline from two-month highs of 1.2761 on resurgent US Dollar demand. 

GBP/USD News

Japanese Yen extends losses, while US Dollar remains stable ahead of Consumer Sentiment

Japanese Yen extends losses, while US Dollar remains stable ahead of Consumer Sentiment

The Japanese Yen lost ground as Japanese CPI fell to 2.5% YoY in April from 2.7% prior. The Japanese inflation remains above the 2% target, keeping the BoJ under pressure to tighten policy further. The US Dollar gained ground as stronger US PMI data reinforced that the Fed may maintain higher rates for longer.

USD/JPY News

Editors’ Picks

EUR/USD defends 1.0800 amid risk-aversion

EUR/USD defends 1.0800 amid risk-aversion

EUR/USD is holding ground above 1.0800 in European trading on Friday. The pair, however, stays undermined by the recent strength in the US Dollar on strong US PMI data and hawkish Fed expectations. Mid-tier US data and Fedspeak are next on tap. 

EUR/USD News

GBP/USD recovers to 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD recovers to 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD is trading close to 1.2700 in the European session on Friday, recovery ground after a brief dip, fuelled by a bigger-than-expected decline in the UK Retail Sales data for April. The pair remains on a corrective decline from two-month highs of 1.2761 on resurgent US Dollar demand. 

GBP/USD News

Gold pares losses on mounting geopolitical concerns

Gold pares losses on mounting geopolitical concerns

Gold puts in a temporary floor under the recent sell-off on Friday, trading a quarter of a percent higher at around the $2,330s, as a combination of market and geopolitical concerns lead investors to seek solace in its safe-haven qualities. 

Gold News

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Kabosu, the popular Shiba Inu dog that inspired the logo of the largest meme coin by market capitalization, Dogecoin (DOGE), died early on Friday after losing her fight to leukemia and liver disease.

Read more

Waning reflation appetite?

Waning reflation appetite?

The week hasn’t been pleasant for the market bulls. On Wednesday, the FOMC minutes showed the disturbing truth that ‘many’ Fed members wondered whether keeping the rates ‘high for longer’ was sufficiently restrictive to tame inflation.

Read more

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology