Stocks are units of the holdings of an organization owned by individuals. In other words, stocks are a way through which investors get part of the assets of an organization. Stock trading usually occurs through the agency of a stockbroker.
A stockbroker is one who serves as an intermediary between the company whose shares are on sale and the investor who desires to purchase shares.
Stockbrokers usually have a network of stock sellers and buyers, so it becomes easy when a stock trader wants to sell some or all of his/ her shareholdings. Such a trader just needs to advertise it on the stock broker’s platform, a buyer for the stock holdings will usually come through in very short timeframes.
Trading stocks can be a very profitable venture, and it is one of the most effective ways to make a reasonable level of passive income. Stock traders make profits when the organizations whose shares they hold make profits as well.
Such traders get a quota of the earnings of the organization corresponding to their stock holdings in the company. Another benefit of stock trading is that stock traders get a chance to vote when a new management board is to be elected in such an organization because technically, they own a part of the organization.
STRONG STOCK ASSETS
Stocks trading have a lot of guiding factors, and if an investor is not careful, such can fall into the trap of buying stocks that will result in terrific losses.
Choosing stock trade assets is not as easy as choosing trade assets for other forms of financial assets investments. One of the guiding factors that investors over the ages have used to approach the stock trading market is the history of the organization.
Choosing secure stock assets has to do, not just with the current profitability of the company. It has to do with how stable the company has been for years, how long the company has existed, and a series of other factors that point to the financial history of the company.
The history (especially economic history) of a company can be a strong pointer to the prospects of buying stocks in such a company.
So What Is Important To Look at During a Financial Crisis?
Guy Galboiz, Tech Entrepreneur and Angel Investor: “Another important factor that stock traders have used to their advantage in stock trading activities in times past is the prospects of the organization.”
“It’s not easy to determine the future holdings of an organization. Still, there are a few key performance indicators that point a trader toward the direction to which an organization is headed.”
“Some of the signs of the future holdings of an organization are the relevance of the company to global trends, the product line of the company, the staff strength, and remuneration of such organization, et cetera.”
“Investors carefully considering these and some other factors have been the secret which traders have used to top trends in the stock trade market for so long, although the COVID-19 saga has caused a lot of processes to change. It may be hard to recover from some of the effects of this virus in a short while.”
COVID-19 AND ITS EFFECTS ON THE FINANCIAL MARKETS
Coronavirus (popularly known as COVID-19) is a contagious disease that has plagued the world since the end of 2019. The virus started in the Asian country of China and has since spread throughout the globe. Coronavirus has caused a significant shake to the entire world, and the financial markets are not left out of the effects of this plague.
With no headway on a vaccine, the Coronavirus has crippled the economy of several nations of the world. The World Health Organization (WHO) has advised that the world should find a way to live with this terrifying virus.
Many governments have been struggling to keep the COVID-19 pandemic checked in their nations. In the bid to contain the Coronavirus, many governments of the world shut down activities in their countries. The shutdown of operations in many nations of the world caused a lot of businesses to shut down (at least momentarily).
Large enterprises have had to downsize staff, and the effects of this virus just keep reverberating through the economic development of the year 2020. Even if a cure is found for the Coronavirus today, it will take a long while to recover from the havoc it has caused. Businesses cannot meet up with their financial targets this year anymore; many small scales businesses remain closed.
With the partial reopening of some nations, many business activities have still failed to resume.
It is imminent that the effects of the Coronavirus have eaten deep into the roots of the global economy. The price of crude oil depreciated so much its price index hit a negative figure sometimes in the past few months.
Many nations that depend on exports to generate income have been crippled to that effect since the closure of many countries’ borders.
The economic play out of the COVID-19 crisis has taken a toll on the value of many currencies globally; the currency value of nations without a robust financial backup has seriously fallen. In contrast, some have risen against the others.
Cryptocurrency, a currency whose creation has an algorithm that resists factors that volatilize the value of other currency forms, is not left out.
The cryptocurrency trading market was affected by the breakdown of financial activities in many regions of the world. Bitcoin, the most substantial cryptocurrency asset, has lost value in the past few months. The stock trade market is not left out of the toll of this dreadful virus.
Many organizations have not recorded any significant profits in the past few months, and the little income generated by many organizations has been used to run its internal affairs such as purchasing raw materials, paying staff salary, et cetera. Many shareholders’ dividends have dropped terribly since the wake of this virus.
The economic havocs which the Coronavirus has caused are much more than its medical effects. It would almost require a miracle if things were ever to go back to the way they were before the dawn of this virus. The earlier we all come to terms with the fact that times are changing and processes also need to change, the better we adapt.
THE EFFECTS OF THE COVID-19 PANDEMIC ON THE STOCKS TRADING MARKET
Stock trading, as it has been reiterated in this article, is the art of trading in the strength of organizations. COVID-19’s effect has not left the stocks trade market untouched.
Guy Galboiz explains: “Many substantial organizations have had to resort to emergency operation procedures since the lockdown commenced. Many of the high profit yielding organizations have been struggling to survive during this pandemic. In this segment, we’ll consider the effects of the Coronavirus on some of the influential stock organizations of the assets trade market.”
Galboiz is certainly right in this aspect, even the stocks of this leading tech brand valued at about USD 1482.60 in February 2020, but by the middle of March 2020, the value of Google stocks had fallen to USD 1054.23.
Although the amount of Google stocks has increased to about USD 1413.24, the value is not as high as it was before the effects of the Coronavirus started spreading across the globe. The cost of Google stocks reduced because some investors were not sure of the ability of the tech company to withstand the economic pressures of the Coronavirus.
Guy Galboiz clarifies about Amazon stocks: “Amazon is one of the brands that has held its flag flying through the COVID-19 crisis. Still, the Amazon company was not left out of the downturn of the effect of the Coronavirus.”
“Amazon stocks sold for USD 2004.20, by the middle of March 2020, the shares of this leading firm reached as low as USD 1676.61. Although the stock price of Amazon has shot back up, one can still not ignore the fact that the stocks of this brand were floored by the effects of the Coronavirus.”
The stocks of Apple have reduced by about ten percent over the past few months, and the trends are not looking like the iPhone makers will get back up anytime soon. Financial experts have linked the reduction in the value of Apple stocks to the Coronavirus, and they advise that the shares of Apple may not get back in form in a short while.
HOW TO TRADE STOCKS IN THE HEAT OF THE CORONAVIRUS FINANCIAL CRISIS
With the many uncertain factors that surround the stock trading market, traders should tread the stock trade market with utmost care in this season. We will highlight some tips to help stock traders get their way around the stock trade market right in this season. It would be advisable to use the information in this article to your stock trading advantage.
Before trading the stocks of any company at this time, be sure to do a comprehensive research into its history. Has the company been profitable in times past? If yes, over how long a period? And how much dividend does the company generate for its shareholders?
Galboiz states this important tip: “The dividend history of the company will give a trader an idea of the profitability of the company in times past, and it is most likely the trend will continue.
“Although the COVID-19 crisis caused severe instability in the running of many organizations, some remain unshaken (or not fiercely affected). One of the examples of companies whose stocks remain profitable even in these uncertain times is Apple.”
“However, the value of Apple stocks fell at some point; the shares of Apple have raised the ladders so much that they are even stronger now than they were at the start of the COVID-19 financial crisis.”
In times of economic trials, debts are bad for organizations. Debts may not be bad when the financial situations run smoothly; the organization will generate the profit in little or no time and pay back, meaning more profit for its shareholders.
In these trying economic times, however, it is essential to know that when organizations owe debts, it may become hard to pay debts back in time because of the slow economic flow. The longer a company lingers in paying its debts, the more the interest such an organization has to pay back.
High-interest payments may not speak well for such organizations. Summarily, check and be sure the company in which you want to invest your stock holdings is not owing, and if they are, be sure it is within their capacity to pay back within a short time frame; otherwise, such a company may be a bad pick for a stock trade.
There are a lot of companies going out of business because of the economic trauma of the Coronavirus. As a result of their downturns, many of such companies would release their stocks out for sale at low prices.
Uninformed traders would buy such shares with the hope that it would rise, whereas the company is already on the sloped side of the gradient. Be sure the trends look good for the company you’re investing in their stocks at this time.
It is not enough to know the history of a company before investing in its stocks; a trader also has to make proper findings of its prospects in order not to fall into a value trap.
SOME PROSPECTIVE STOCK INVESTMENTS AT THIS TIME
There are always two sides to a coin, while the trends are looking bad for many companies; there are those whose businesses have boomed massively even in the heat of the coronavirus financial crisis.
Financial experts have determined that the industries listed below are more likely to be profitable stock investments at this time.
Medical Tech Organizations
The demand for the services and products of the medical industry has been on the rise, and they are not likely to fall soon. The secret to stock trading anytime is discovering the trend of events, and the pattern will dictate the direction of the market.
Guy Galboiz, Tech Entrepreneur and Angel Investor:
“The advent of the COVI-19 pandemic has caused a severe shift in business transactions towards the medical line. The Coronavirus has caused a lot of people to realize the need for clean and healthy living.
“Many sanitizers have been sold since the start of the coronavirus pandemic, and it’s not likely that this trend will come to a pause anytime soon. Face masks have been the trending order in many parts of the world since the advent of the Coronavirus, and the face mask market has had a global rush since Coronavirus started.”
What Galboiz is saying here is so simple but yet so true and many overlook this simple fact that when there’s a downturn in the market, it is because there’s been a shift to other markets. The secret to trading stocks is researching and finding the place where the market is trending at this time.
The World Health Organization (WHO) has advised many nations of the world to find a way to live with the Coronavirus, as vaccine processes will take at least a year before final approval. Even if a universal vaccine is discovered for the Coronavirus today, it will take at least one full year before it can be approved for public use. And in fact, the vaccine has not even been discovered.
The medical supply line will witness a boom over the next couple of years, as the effects (mainly psychological) of the Coronavirus are not likely to go into oblivion anytime soon, and life will demand that people live healthily. Trading stocks with organizations that deal in the medical line are almost an entirely risk-free form of investment at this time.
Online Payment Organizations
The world has sustained itself on the internet since the dawn of this pandemic. Online transaction rates have increased, and so has the profit generated by payment platforms online. This trend is one that’s also likely to continue for a long time.
As aforementioned, the trends determine good stock investments. The direction of payments has shifted towards the internet since the imminence of this pandemic. Thanks to innovations around the use of the internet, there are a lot of payment systems on the internet today, and these payment systems have witnessed increased traffic since the COVID-19 pandemic spread roots across various parts of the globe.
The availability of other payment systems to physical payment methods has inspired a lot of industries to engage these payment systems. Organizations that offer transactions in online payments are likely to remain relevant over the next couple of years as the Coronavirus has brought the dawn of a new age, one which will last for more than a while.
Guy Galboiz sums it up for us in simple yet helpful terms: “The stock trading market is a huge one, and a trader must approach it carefully, especially in these times of uncertain futures for the financial world.”
“The greatest hindrance to profitable stocks investment is discovering how the current trend will tell on organizations, their products, and their services.”
“The major work, a stock trader has to do during this coronavirus pandemic is to find the link between the Coronavirus and the many stock organizations that exist. Once this link is found, the stock trading market becomes a walkover.”