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Investor Tips 2019: What To Include In Your Portfolio

Author: Martin Moni
Martin Moni
All publications of the author

Are you prepared for 2019, or still planning for your vacation? There’s just over 2 months left before the new year rolls in; and whether you have had a good or bad 2018 so far, there’s no benefit in crying over spilt milk. Instead, start getting prepared for the coming year early so that you know where to set your sights and make it a good one.

Numerous studies have showed that a good investment is that which includes multiple assets rather than focusing on a few. The idea was first hypothesized in the 1973 book by Burton Malkiel – A Random Walk Down Wall Street. In the book, Malkiel says that the stock markets follow a random path that cannot be predicted. At the same time, Malkiel noted that market averages are always on the rise, and that this is a better investment opportunity than the former. (You should be: Investing for the future)

This sentiment has been echoed over the years by many economists and investors, but one of the most, shall we say, exciting, evidence came in 2013. The observer started the year by allocating virtual £5,000 to some professional investors, school children and a cat named Orlando. These parties would then choose the stocks to invest in throughout the year; the cat did so by throwing a ball on a chart representing various companies. At the end of the year, the cat had made the most money, raising the initial capital to £5,542. Meanwhile, the investors only increased the capital to £5,176 and the students were down to £4,840.

In the end, it served to prove that you can’t really trust professionals to make accurate predictions about specific assets, but a combination of assets will always rise in value over time. Such kinds of investments are called index funds, and they pick assets across various sectors to hedge against risk in any single sector. Industry averages like the S&P 500 shown in the chat above are also a good example of why it is better to diversify your portfolio because markets will always go up with time.

This is what we shall be attempting to do today in this post – creating a sort of index fund. Like the best index funds, we shall also be covering various assets in different industries ranging from currencies, stocks, commodities, cryptocurrencies and any other exciting opportunities. If you can manage to come up with such a portfolio at the start of the year, then you should notice a significant increase in value as the year goes on.

Currencies

Of course, we wouldn’t talk about an investment portfolio without talking about currencies; it is what we do after all. At the same time, it is very difficult to determine the most exciting currencies of the year considering there are so many of them. Add to that, events are always changing on the Forex calendar that make it difficult to predict where the action is going to be. In short, a lot of variables. But it is not completely impossible to know where to look – the key is in observing macroeconomic factors. If you remember, we discussed position trading in a previous post, and how you too can learn to use macroeconomic factors to spot long-term trends. We used these same factors to try and narrow down the 5 currencies you should be looking out for in 2019 and where the opportunities will be. (Does Bitcoin Stand A Chance Of Becoming The Worldwide currency?)

US dollar

It may seem like a cliché to ask a trader to look at the US dollar in their trading, but it can’t go without being mentioned. After all, it is responsible for 80% of Forex transactions, so knowing what it does will help you make the right decisions 80% of the time. Anyway, just like the US economy, the dollar has been strong all through the year compared to other currencies. The image below represents the US dollar index that compares the dollar to a basket of other countries. As you can see, it has been on the rise all through 2018 and is now trading at 96.595 at the time of this writing. In order to accurately predict how the currency is going to move in 2019, we first have to understand what has been propping it up.

In the case of the dollar, there are a number of factors, but the main one has been the increase of interest rates. This year, interest rates have been raised 3 times from 1.5% at the start of the year to the current 2.25%. This is considered to be the 25th lowest interest rate in the world, but against other major currencies, it is relatively high. On the plus side, it has increased the strength of the dollar, hence the growth of the live DXY index in 2018. (This is a: Forex strategy on based on MAs)

Increasing interest rates seem to be likely for the near future, and perhaps even into the first quarter of 2019, which would mean the dollar will continue to rise. The current rate of inflation in the US is 2.5% as of September 2018, yet the target inflation rate is supposed to be 2%. This means that the Fed will probably keep raising interest rates until inflation is kept under control. The president himself has been at loggerheads with the Fed chair about raising interest rates, but the Fed is independent and does not have to give in to political pressure. It is also worth noting that the president himself complained about low interest rates during his campaign, but now the opposite. All the same, the Fed will keep raising rates because of the president’s own policies such as tax cuts and tariffs. These and other policies are raising inflation in the US, and the Fed must be ready for the eventual increase in inflation and be ahead of it. (You should be: Trading using central banks' reports)

Apart from interest rates, the economic growth in the US has made the dollar very attractive to investors, and that also contributed to the increase in its value. As we shall see, the S&P 500 and many other US stocks have been increasing in value, and this makes the economy strong and, subsequently, the currency itself. On the other hand, this quick growth of the economy is bound to slow in 2019, which could finally cause the dollar to weaken. There are already signs of market correction in the stock market, and this will eventually make the currency weaker. Such a correction in the stock market could be seen in the first quarter of 2019, and that is when the dollar will finally show signs of weakness against other currencies. (Look out for these: Main central bank meetings)

On the 6th of November, the US will hold their mid-term elections that determine the composition of the House of Representatives. It is a major election that could affect the future of President Trump. A lot of industries depend on the Trump effect to succeed, and it is this effect that has made the US economy prosper. If investors start to worry about his future in office, should he lose, then the dollar will once again be affected. (Let’s try: Comparing fundamental and technical analysis)

The most significant effect on the dollar, though, is actually going to come from other major currencies and the factors affecting their strength. Even though it is dominant, the dollar is still affected by other currencies in a major way. Therefore, in order to determine exactly how the dollar will perform in 2019, we will need to look at the other currencies. For now, you should still hold on before investing in the dollar because any factors affecting it will not kick in until probably by the second quarter of 2019. When that time comes, remember the factors affecting the currency and respond accordingly. (You can now use a: Forex strategy based on fractals)

Euro

Over in Europe, the world’s second most heavily traded currency is also gearing up for major changes in 2019. The ECB announced in their meeting that they would half the quantitative easing measures in September as they prepare to stop it completely. The ECB had been buying European government bonds worth €80 billion every month in order to increase inflation and stimulate the economy toward their target inflation ratio of 2%. So far, the latest reports show that the inflation rate is 2.1% and some experts don’t think it’s right for the ECB to stop their QE measures. Since the inflation rate is still around the target, it is unlikely that the ECB will raise interest rates like the Fed, but perhaps their decision to stop buying bonds will strengthen the euro in 2019.

As I can see, there really is nothing to spur the euro upwards in 2019, at least not in the first half of the year. In fact, the Eurozone economy may even slow down once the QE measures are halted. Sure, the economy will continue to grow, but at a slower rate that it was in 2018. Plus, there are other problems haunting the Europe economy. Last year, the European economy was boosted by a thriving industry sector, especially from Germany, that led to fast growth in 2017. 2018 has not been the same, because exports from Germany have slowed just like many other industries due to economic crises in emerging economies. Also the Italian government is proving costly because borrowing costs are on the rise and hurting the entire region’s economy. (Forex Rigging And Manipulation: How The Major Investors Pull It Off)

Since the ECB announced their decision to stop buying bonds in June, GDP growth has declined, and yet the bond-buying programme isn’t even completely shut down. Starting in 2019, GDP growth will be even slower and cause the euro to suffer. On the other hand, European Parliament selections will be held in 2019, and that may introduce a new set of representatives with a different vision for the economy. As it stands right now, the euro seems to still be on a downturn until the second half of 2019. (A Complete Guide To Volume Spread Analysis In Forex Trading)

Sterling pound

The first thing I ask myself about the future of the pound is the progress of Brexit talks. Ever since the Brexit referendum, the sterling pound has been taking a pounding as investors avoid it for being risky. The chart below represents the sterling pound index (BXY) showing the value of the pound against other major currencies. If you have been keeping up with the Brexit talks, then you will recognize the periods where Brexit talks were productive and when they weren’t. All through the talks there has been a tug of war between the EU and UK with the former seeking as close a relationship as possible but the latter wanting none of it. One of the points of contention is the Irish border that is proving to be complicated and the talks are currently at an impasse.

For most of the year, the pound has been trending sideways as the talks continue, but there has to be an end to it in 2019. There are two possible outcomes, either the separation ends in a mutual deal or there is a hard Brexit with no deal. Obviously, the latter option would be the least favourite to the pound because, even though the euro will suffer to, the pound will be more affected.

Due to the current state of limbo, there has been very little volatility in the pound this year, but experts believe this is about to change. The overwhelming opinion in the markets is that there will be a deal struck before the March, 2019 deadline and that the pound will experience a growth spike. The current rate of the GBP/EUR pair is 1.127 but the markets believe ‘fair value’ is around 1.33. The Forex strategist with UniCredit bank in London, Kathrin Goretzki, confirms that this is the fair value of the pound because investors have been demanding a discount on the pound over uncertainty of the currency over the past year. (Let's get on with the Brexit already!)

There is a lot riding on these Brexit talks for the pound, and it will certainly determine the future of the currency in 2019. If the EU and UK reach a no-deal Brexit, then the pound will take a serious beating and decline in value sharply. Some experts even believe that the euro could become more valuable than the pound in case of a hard Brexit. That would definitely be terrible for the pound going into 2019, but unlikely to happen. (Remember: How the Brexit affected Forex trading)

Even with this in mind, there are still other factors to think about regarding the pound, such as Bank of England’s policies. The BoE raised interest rates twice this year first in February from 0.25% to 0.5% and again in August to 0.75% up from 0.5% in order to curb inflation that had risen to 2.7% beyond the 2% target. The move slowed inflation down to 2.4% in September proving to be effective in returning inflation to within the target area. Now all eyes are on the Brexit talks for direction, whereby inflation is expected to increase by up to 0.5% if there is a no-deal Brexit. That would force the BoE to raise interest rates further to control inflation. If a deal is struck, though, then inflation will be curbed, which would be the optimal outcome. (Try: The 3 Most Trusted Exchange Authorities in The World)

All in all, the pound is going to be a very exciting currency to watch in 2019 because of Brexit. Its strength is expected to continue dropping toward the end of 2018 and even in the first few months of 2019, then the fireworks will begin depending on how the talks pan out.

Japanese yen

For a long time, the Bank of Japan (BoJ) has kept interest rates in negative territory to stimulate the economy. One BoJ official attributed the choppy bond market in the country to the super-low interest rates. It is not the first time that a few BoJ officials have seemed hawkish, but this time factors seem to be pushing the country toward that end. Trade wars between Japan and the US, for one, will greatly affect Japan’s economy which is heavily reliant on exports. While the increase in interest rates is not yet urgent, there is a high probability that there will finally be an increase in rates from Japan. (Concepts Every Trader Should Understand: Leverage, Margin And Hedging)

When this eventually happens, the yen will increase in value, spurred on by the country’s current account surplus. An increase in interest rates will also motivate foreign investors to direct their monies inward to further stimulate the country’s economy. So far this year, inflation has not exceeded 1.5%, but it will when interest is increased. Therefore, as an investor you should keep an eye on the Japanese yen as you wait for the BoJ to make a move.

Australian dollar

The aussie has been on the ropes all this year against other major currencies like the US dollar. Part of the reason could be that the latter was just extremely strong, but the aussie itself was weakened by slow economic growth in China and other Asian countries leading to less demand for Australian exports and political uncertainty. This is expected to change in 2019 as price of commodities recovers. Experts from UBS and Bank of America Merrill Lynch both agree that the aussie could see a 14% increase in value over 2018 when the Asian economies recover.

In 2019, there will also be federal elections in the second quarter of 2019, and that could decrease the value of the aussie. Meanwhile the RBA is expected to increase interest rates in response to rising inflation. In the first quarter, inflation was 1.9% and then 2.1% in the second quarter, which experts believe could prompt the RBA to raise interest rates if inflation continues to rise. As you can see, there are a lot of pieces affecting the Australian dollar in 2019, and it all begins with the expected release of inflation reports expected next week. If the report shows higher inflation in the third quarter, then you could reasonably expect higher interest rates either before the year’s end or early in 2019. Regardless of what happens, everyone expects the aussie to make a comeback in 2019, and these gains could start as early as January. So keep an eye out for this currency too.

Cryptocurrencies

It’s no secret that cryptocurrencies have had a bad year in 2018. At the start of the year, the total market cap of coins was $813 billion on the 7th of January with speculation that it would reach $1 trillion. However, things are very different now with the market capitalization barely staying above $200 billion. If this were the stock market dropping by over 70%, we would think it’s the end of the world. Luckily, the crypto markets are still young and volatility is to be expected. The problem, though, is that trading volume has decreased a lot down to about $8 billion per day from records of over $60 billion back in January. (Will Cryptocurrencies Recover From Their Price Slump In 2018?)

The truth is that many people have become sceptical about cryptocurrencies and the hype is definitely out of the industry. No longer do we see headlines on the news about crypto especially after adverts were banned by Google and social media. I understand the criticism, and myself have been railing against the industry for months. But there is no question the industry is still thriving despite the recent troubles and general averseness. Indeed, institutional investors have also made the first steps in joining the fray, so let’s look at a few coins worth keeping an eye on in 2019. (Investing In Cryptocurrencies: Watch These 5 Profitable Cryptocurrencies)

Bitcoin (BTC)

We’re not going to talk about Bitcoin just because it is the most heavily traded coin but also because it is the most liquid given the daily trading volume. It has a 53.8% dominance in the industry according to Coinmarketcap, a position it had lost when crypto was exciting at the start of 2018 and end of 2017. Back then, Bitcoin only dominated about 35% of the market, but it has since become the most dominant once again. This is because the value and utility of Bitcoin has proven to be undeniable even when people remained sceptical. Many coins have come and gone, and even many of the ones left are slowly dwindling because they did not have any real-life applications. Bitcoin has remained strong because it is still in use and continues to gain more utilities. (These are the: 5 Most Popular Uses of BTC and other Coins)

In 2019, there is even bigger news coming – Bitcoin ETFs. Ever since 2017, the pursuit of a Bitcoin ETF has remained elusive. The Winklevoss brothers were the first to try it in early 2017, but the SEC shut them down. A few other companies have also tried to no avail. Now, though, there seems to be some hope as the SEC is still considering an application by VanEck and SolidX. They argued that various regulated markets already exist for bitcoin such as Bitcoin futures and that the Bitcoin ETF would protect investors among other reasons. The final decision about the ETF is expected today from the SEC, and there is a probability this will be accepted. (It’s a must to have: 10 Most Important Resources to a Cryptocurrency Trader)

If it is, then you should expect to see Bitcoin make a comeback because there will be even more ETFs down the line. And even if it is not approved, there is yet another application for an ETF proposed by Coinbase in partnership with Blackrock. Yet more institutional investors are getting in on crypto, such as the Intercontinental Exchange (ICE) who want to start offering Bitcoin futures for large investors. Furthermore, these ICE Bitcoin futures will be physical. Then there is TD Ameritrade want to start offering trades for Bitcoin and other coin futures listed on CBOE and CME Group. This North American broker has over 11 million clients and $1.2 billion in assets, which would certainly raise the trading volume in crypto. (Know the: Cryptocurrency Regulations Around the World)

With so much going on with Bitcoin, it shows that the excitement is not yet over for the coin and that it’s not yet time to give up on crypto.

Ethereum

Although the entire crypto industry is on a downturn, Ethereum has taken a seriously major downturn since its peak in January 2018. The coin is down almost 85% in under a year, and investors have become very sceptical about the number two coin. The main reason given for such a huge downturn is the selling of ether by startups that got funding via ICOs. Out of fear of losing their invested capital, these investors began cashing out and using either fiat or other coins. Remember that ICOs were among the leading causes of the spike in Ethereum’s value, so the selling of these ether tokens naturally caused the coin to depreciate. (Ethereum Price Prediction Update And Forecast For Autumn 2018)

Problems are not only from outside, but also from within the company itself. There were fears that Ethereum mining had become the purview of ASICs and making the coin ‘centralized’ rather than decentralized. To remedy this, developers were supposed to roll out the Constantinople hard fork in November, but the fork has been pushed forward to 2019. The decision lost the company investor confidence. Besides, the Ethereum Enterprise Alliance may also be falling apart due to disagreements with the founder Vitalik Buterin over the future of the coin. This was yet another major reason for the growth of ether value, and without it institutional investors are panicking. (Behold: The Most Prominent Cryptocurrency Hacks and Scams You Should Know)

Initial Coin Offerings (ICOs)

Besides investing in already existing coins, one could also look for upcoming ICOs and invest in them to make a profit. By April of this year, $6.3 billion was raised through ICOs, which was 118% higher than the total seen in 2017. This statistic showed that ICOs had become a trusted way of investing in startups, following the laws by the SEC that ICOs be reported to them. This brought in institutional investors with more money to make the ICOs industry very lucrative. There are ICOs being launched every week, and you only need to be aware of them and get ready to invest. But be careful not to fall for a face ICO because there are plenty of them out there created by fraudsters just to steal from investors. When you do find an attractive ICO, consider whether you want to invest over the short or long term. (Do you ever wonder: What Is The Future Of Cryptocurrency In Finance?)

Crypto indices

Indices are more profitable in the long run as we have mentioned, and the same can be enjoyed in the crypto industry. Already, there are several crypto indices launched by the crypto exchanges that anyone can invest in if you want to make your crypto investment even safer from the high volatility. A few examples include HB10 created by Huobi and including 10 coins and Coinbase Index Fund by Coinbase, tracking all of their coin offerings. The general consensus is that coins will appreciate in value over time, and these indices are a great way of getting in on the action. (Finally: Cryptocurrency Ads Banned From Google And Social Media)

From all the above, we can see that there a lot of opportunities in the crypto world to invest in come 2019.

Stocks and indices

When investing in stocks, there’s no one better to listen to than Warren Buffett because he has proven to be a good investor over decades in the industry, so don’t complain about all the Warren Buffett quotes you’ll see. As a matter of fact, let’s just begin with one that is very relevant to the investment of stocks, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down”. Basically, this means that you should buy stock that is currently undervalued in the market considering its actual value. Consider the example of Netflix when it was listed on the NYSE back in 2002. At the time, very few people saw its value and the company’s stock was valued at $15, yet now it is trading at over $300. The key to investing in stock is looking at the value of a company in the sector it exists and the future of that sector. The problem, though, is that there are so many stocks around the world with potential that it’s difficult to pick the best. But we shall try to come up with at least 5 that are just about to take off. (Ask yourself: Should You Invest In CFDs Or Stocks To Make More Money?)

Nike (NYSE: NKE)

Up until September this year, Nike has been an excellent performer in the stock market. At the start of the year, Nike stock was trading at around $62, then it increased to $86 in mid-September, recording a 38% growth. This was then followed by a sharp decline to current price around $73. Despite this drop in value, Nike still remains a worthy stock to invest I come 2019 because the company is still in the game.

First of all, the technical analysis showed the stock was due for a correction soon since the value of the stock had gone far ahead of the 200-day SMA. As you know, value tends to remain close to the SMA line and it pulls back whenever it goes too far away. This is what seems to have happened, since the stock corrected and is not trading at around the SMA line.

Apart from the technical, even the fundamentals also support Nike. Don’t forget that Nike is still the top clothing brand in the world, and the demand for clothing will never depreciate. Furthermore, there is an increasing trend of wearing athleisure and trendy clothing, something that Nike always delivers.

There is yet another reason put forward by experts to explain the recent dip in value of Nike shares, and that has to do with the general downturn in the US stock market. Historically, stocks usually drop in value in September dating back to 1928. According to Bespoke Investment Group, the average decrease in the S&P 500 is 1.05%, but there have been worse years like in 2011 when the S&P lost 6.4% in the month. Thus, this could explain why the value of Nike has followed in the footsteps of the S&P. Nike’s competitor, Adidas, also showed a decline in value in September, even though it is a European company. That was another explanation for the decline, that perhaps the trend had occurred across the sector, and it doesn’t mean anything about Nike in particular.

Investors were also worried about investing in Nike since the company’s products are produced in China, yet there has been growing fears of a trade war. These fears may be valid, but they need not apply to Nike. To begin with, only about 10 to 15% of footwear and apparel produced in China is sold to the US, and that shows there won’t be much of an effect to the company’s revenue since we’re talking about a global brand. Then there’s brand loyalty. I myself am a Nike fan, and always stick to the brand just like any other fan out there. This gives Nike a lot of pricing power, enough to pass the cost along to the consumer while still maintaining their profits.

And the recent Colin Kaepernick advert created a lot of engagement and probably increased consumer loyalty. Executives of the company said that young shoppers supported the athlete’s stance, and that this led to higher sales. Finally, the company’s fiscal report showed the company was growing at a fast pace. Both revenues and earnings per share had risen more than experts expected, and this was due to greater global growth besides the US. We recommend buying Nike stock in 2019 because it has not only shown great growth this year, but it also has a lot of promise in the coming year.

Lockheed Martin (NYSE: LMT)

It should not come as a surprise that a defence company is on this list considering the increase in defence spending. The Trump administration promised greater military spending, and this is making defence companies excellent investments. The reason we selected this particular stock from the rest was because it recorded better than expected returns according to the recently announced third quarter financial results. Sales revenues were up to $14.32 billion, $1 billion higher than market estimates and earnings per share up to $5.14 being above market expectations by about $0.86. in response, the company’s stock jumped by 2% following the news, but later continued to decrease in value.

From the chart above, you can see that LMT stock continued to decrease this month despite the positive financial reports. This could be attributed to the overall decrease in value across the US stock market as it often is historically in September. LMT in particular took a rather sharp decline compared to Nike because the company is dependent on the US market compared to the latter which has a global presence. Add to that, Nike only depends on the US market by a small percentage. There was also a worry among investors as reported by Seeking Alpha that most companies were reporting excellent results and that it could mean there was a correction in the horizon. Thus, this could have sparked a selloff. In the case of LMT, for example, the actual financial results could have spooked investors that the stock was overvalued.

These sentiments could be true in the short term as market corrections do occur, but that does not mean the company won’t continue to grow in 2019. From the company’s own outlook, they expect net sales to rise by between 5 and 6% as long as the government continues to support the company’s programs. This assumption seems to be true, as there have been no indications of stopping any defence programmes. Even Goldman Sachs raised their outlook for LMT from their previous expectation of $391 in 2019 to $394 per share. If these estimates hold true in the coming year, they would make an investment in LMT a very good choice.

Neurocrine Biosciences (NASDAQ: NBIX)

This is a pharmaceutical company that primarily produces drugs for neurological and endocrine related disorders. Their main product is Ingrezza, which was approved in April, 2017 and rolled out in May, 2017. That single product generated $71 million and $97 million in the first and second quarters of 2018 respectively. These figures are impressive considering the drug was only recently launched, and that the company was only hoping for slow growth. Besides, Ingrezza is so far being used only for treatment of tardive dyskinesia, but they’re seeking approval for its use in treating Tourette’s as well. It’s not just Ingrezza, because they’ve got several other popular drugs that they distribute, plus they have a partnership with AbbVie where they get 20% royalties. AbbVie is a part of Abbott, a major pharmaceutical company, and the partnership is really going to boost NBIX’s sales.

Considering that this company is still in the early stages of growth, there is a lot of potential for huge profits in 2019. The general consensus on Wall Street is that the stock will rise in value up to $133.71, and the technical analysis from the above image shows that this is achievable. Prices still seem to be trending above the 200-day SMA as they have been all along, a clear trend that the stock is bullish. These technical analyses are also backed up by the financial reports released by the company. In the second quarter of 2018, earnings per share were $0.68 million, up by 1,429% from the same quarter back in 2017. This showed the significance played by addition of new drugs into their line-up.

If the expectations by experts are true, then NBIX would be a great addition to your portfolio. This is certainly one of the more exciting stock picks by all experts, and there is a rush to get in on it during the initial stages when there is a rush.

WPX Energy Inc. (NYSE: WPX)

Besides defence, energy stocks are another lucrative sector of stocks to invest in because this is another sector receiving attention from the administration. Over the past four quarters, the company has delivered positive financial results. They missed to reach their expected profits in the first quarter of 2018 due to weather reasons. Mining companies can be badly affected by changing weather as WPX was between February and March, which was the reason for the dip in revenues that quarter. Other than that, the company is a solid investment, especially when you look at the changes being made. They have shifted from being a strictly natural gas mining company and are gradually shifting over to oil, which is a better investment.

The chart above shows you the value of WPX stock over the past year, and you can see it has been pretty good up until September, 2018. Then again, that should be no surprise since we have seen all other companies experience the same thing this past month. Plus don’t forget that oil prices are on the rise, and that is bound to make the company’s revenues rise in 2019. Instead of focusing on larger energy companies, smaller outfits such as these could generate higher profits.

S&P 500

Instead of focusing on just a few stocks, why not invest in all of them, or at least 500 of them. After all, as we said at the beginning, industry averages are more predictable than the stocks themselves. The S&P 500 needs no introduction as it is the sort of standard for the US economy, and like the economy it has been growing rapidly over the past 2 years. Naturally, after months of growth, the index was due for a correction and sure enough it came in spectacular fashion. In October the S&P 500 Index fell by almost 10% because most stocks were also in correction.

The difference this time is that the correction has gone below the 200-day SMA. There was another correction at the start of the year, but as you can see from the image above, the markets were unable to break below it but instead acted as a dynamic level of support. This time, however, the S&P is trending below the moving average, and this could be the start of a downturn. I expect that the index will continue to drop in 2019 down to the 2,200 region up until the third or fourth quarter when there may be a recovery. The growth of the index has been too good to be true, and the bears are just itching to get into the ring. This is their time, and 2019 will see a beat up S&P 500, at least for the first several months.

Commodities

The commodities market, as we previously discussed, is a very volatile one and you need to be very well aware of the commodity you’re trading, what factors affect it and how it is traded. With so many commodities in the market, we shall once again focus on just 5 commodities that have the potential to be heavily traded. Trade volume and volatility is key in the commodities market, so you have to really know your stuff. (To make more money: How To Make Trading Metal CFDs More Profitable)

Crude oil

Following a few years of declining oil prices, the commodity has been making a comeback over the past 2 years. From a low of $40 in April, 2017 the commodity has grown in value by around 90% to the current value of $76 at the time of writing. In fact, the value had reached a high of $86 at the start of October, 2018. Despite the growth for much of the year, crude oil prices fell sharply in October due to the selloff in the US stock market. As we saw earlier, US equities had declined in October as markets performed correction and this in turn caused investor panic. It also pointed to slower economic growth that could reduce the demand for oil, and so the selloff in oil also began.

Demand in 2019 seems like it will continue to decrease due to the aforementioned factors and the increase in supply. OPEC nations have been producing a lot of oil and causing a surplus around the world. People were hoping that the sanctions due to be placed on Iran could reduce the supply, but importers are confident they will get some waivers on oil imports. All in all, it seems 2019 won’t be as rosy for crude oil as it was in 2018, and this could present some excellent opportunities to short the commodity. (Do you know: Which Are The Best Commodities To Trade In The Autumn?)

Gold

Gold reacts the opposite way to US equities, which is why the value of the commodity has been rising in October as the value of equities slumped. As we have seen, US equities are bound to continue dropping in value over the first half of 2019, and this would be excellent for anyone who wants to invest in gold.

The technical analysis of gold shows that it is rallying toward the $1,250 mark after going above the $1,200 mark. If this value is reached and surpassed, then gold could continue upwards into 2019 and perhaps even get back into the $1,300 region. Among commodities, gold is one of the favourites because of its liquidity and volatility, and there will certainly be plenty of the latter in 2019 because of the numerous changes occurring around the world.

Following up

So far, we have looked at many assets you could invest in during the year. All the same, as we mentioned at the start, things change with time – some new opportunities will come up and some good ones will turn sour. That means you shouldn’t rest on your laurels but rather keep yourself abreast with the goings on in the financial markets. Don’t be alarmed and assume it’s going to take you hours in front of your TV watching Bloomberg, because there are many other reliable sources of information. As you keep learning about the markets, you can freely add more assets into your portfolio that seem profitable as you eliminate those that aren’t doing well. Keep doing this throughout the year and you will have a very good holiday at the end of it. (Here are some: Sources of Forex trading information)

 

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.
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