Earlier episodes have touched on the changing market conditions and the need for adaptation. Nobody could have predicted just how tumultuous the market has become, resulting in a choppy landscape. In this week’s episode of the Money and Investing podcast, join Co-Hosts Andrew Baxter and Mitch Olarenshaw as they dive into some particular places they see opportunity amidst the current turmoil.
Recent Opportunities in the Midst of Turmoil
The attack on Ukraine coordinated by Russia and Vladimir Putin are gravely tragic and have had a major impact on financial markets as well. Despite the overall market suffering, there are sectors and commodities that have benefitted and could continue to benefit from the geopolitical issues currently plaguing Europe. Host Andrew Baxter highlights some of the trades he and his team recognised which allowed their clients to get some positive results in spite of major economic turmoil. Namely, USO (the US Oil Fund) and XLE (an energy sector ETF) have been benefactors of the increased oil and gas prices brought about by sanctions against Russia, Europe’s largest oil and gas producers. These are just a couple of the ways in which turmoil can be turned to your advantage when it comes to trading.
Choppy Markets – Our Approach as Traders
Adaptability is a core skill for any successful trader and recent events show you exactly why. Investing can bring incredible rewards, but it’s important to remain mindful that the environment isn’t always favorable- sometimes you’ll need to take an active approach and adjust your strategy accordingly. Co-hosts Andrew Baxter and Mitch Olarenshaw point out that trading in a market requires agility and the tools to address different types of markets. What we have seen recently, and what we may continue to see for a while to come, is a market floating more or less sideways with big jumps and dips along the way. Buy and hold trades are not the right strategy for that kind of market, so we need to find some other means of profiting from the landscape we find ourselves in.
The Importance of Fundamental Analysis
Looking at a chart, it is easy to tell whether the stock has moved up, down or sideways. Maximize profits by predicting trends before they become visible on the chart. Host Andrew Baxter discusses how strong fundamental analysis and a solid understanding of how different asset classes are affected by certain factors and events provides direction for traders in markets where trading is not simply following an overall upward trend. A topical example of this is the way gold behaves in inflationary periods and how it has been performing in the midst of the recent Russian invasion of Ukraine.
Many have deemed cryptocurrency as a substitute for investing in gold, however Ukraine and Russia are key centres for crypto mining, and the recent conflict has led to huge losses in the cryptocurrency space. Due to this fundamental aspect, investors have reverted back to the safe haven of gold in this inflationary period.
Opportunities in the Medium-Term
Trading commodities is not for the faint-hearted, but the profit potential can be enormous. The turmoil across global markets will no doubt cause some grief to some sectors, and yet others will benefit – it is just a matter of figuring out which ones. Listen in as Andrew Baxter walks you through what he feels might just be the best opportunity to profit in the medium-term, and why he believes the price of wheat is set to rise. Russia and Ukraine are two of the biggest wheat producers in the world and it would not be surprising to know that wheat farmers in Ukraine are not able to be farming in the midst of the fighting while the west imposes sanctions on Russian wheat. The demand may remain the same, but supply shortages could lead to colossal price increases in wheat futures over the next few months.
Energy – Does it Have Anymore Gas?
You may have begun noticing the increased cost of filling up your car recently, particularly in flood-affected areas. This is largely to blame on the supply issues that come from the sanctions imposed on Russian oil. Host Andrew Baxter points out that although prices have already hiked, there is a very real chance that energy can continue to move higher and perhaps even a substantial amount.