Assets You Should Watch for Wealth-Building and Protection – CEOWORLD magazine
In 2021, growth prospects seemed enticing for capital markets. Its global size ballooned to hundreds of trillions with double-digit year-over-year growth. But not even a year later, the scenario has completely changed. Inflation has started to cool down but remains elevated at 7.7%. Meanwhile, interest rates will go as high as 5% in the next twelve months.
With the looming recession, the market is plagued with pessimism and uncertainties. Investors and entrepreneurs alike are anticipating a massive crash. Given these overwhelming changes, prudent financial planning is crucial to hedge market risks.
Fortunately, a lot of financial resources are still showing a rosy future. This article will list the best assets to watch for better wealth-building and protection.
Stocks
Primary stock composite indexes, such as DJIA, NASDAQ, and the S&P 500, had a sharp downtrend. This bearish pattern has been visible since the latter part of 2021. Sadly, they have not recovered as inflation, and European tension continues to hammer the stock market.
You may think it’s time to sell your stocks to avoid further losses. It’s even tougher to determine a good entry point to make a stock position as uncertainties pull prices downward. Although there has been a slight revival in the last month, its consistency is yet to be revealed. If you check the short-term moving averages, say one month, most stocks still move sideways. But year-to-date and six-month moving averages show the opposite.
Amidst downturns and price corrections, this phase appears to be normal. The US economy is yet to stabilize and bounce back. Also, it can be an opportunity to buy stocks at their lows and realize attractive yields in the long run. Even better, many stocks remain committed to dividend payments with excellent yields.
Banking stocks can be ideal as interest rate hikes lead to higher interest fees on loans. But you must check some accounts, such as interest income and expenses. They will give you a clue about how the bank manages its loans and deposits. Compare your initial observation by referring to its loans, deposits, and loan-to-deposit ratio. Also, check its cash and investments and their percentage of total assets. Other essential metrics include Debt/Equity Ratio and Return on Average Equity.
Hotels and accommodations are also good stocks to watch due to revenge travel. They haven’t unleashed their full potential as restrictions and pandemic fears persist. They may also be hammered in the next few months due to seasonality and inflation. But once the economy reopens and summer comes, prices may fire up. Before buying hotel stocks, check the business model. A business based on RevPAR (revenue generated per available room) appears more flexible and viable than leased contracts.
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