Identifying which markets are worth investment

Investors are going to be looking ahead to 2017 with gritted teeth – there are many unknowns for them to consider. How, for example, will the Trump administration shape up in practice? Will the European Union continue to fragment, impacting the world economy? How will continued strife in the Middle East affect energy prices? These factors make it difficult to predict how some sectors are likely to perform. Reflecting on how the markets have behaved this year won’t be enough to help you make good decisions about where to put your money now. What should you consider, and which sectors can offer you a surer bet?

Things to consider

The safest way to predict the behavior of any sector is to reflect on how it has performed in the past. But, in a situation like this, you need to look over a longer timespan and try to make observations about how consumers have prioritized it when under pressure. It’s also important to factor in emerging trends. For instance, while everybody prioritizes good health care, the types of health care that matter to them can change. Emerging technologies can reshape markets, with the rate at which they do this depending on a combination of ease of implementation and customer demand. Other important factors, across the markets as a whole, include population dynamics, political shifts – in popular thought as well as in formal politics – and cultural trends.

Automobiles

Automobile manufacturers have been doing better over the last few years. Any dips in the market have been bottoming-out at much higher levels than they used to, which means that even if things do go wrong and you are forced to sell at an unfavorable time, you are unlikely to make much of a loss. The past year and a half saw a steady downturn, but several factors now point to that coming to an end. Donald Trump is supportive of fossil fuel industries and plans to improve road infrastructure. In contrast, the rise of the electric car in Europe is opening up new market sectors and tempting consumers to buy new vehicles sooner than they might otherwise have done. This makes it a good time to buy before share prices start to rise again, as they are likely to do, throughout 2017.

Real estate

Slow growth in the construction industry has created a bottleneck for house buyers and has pushed prices upwards. But, has hidden benefits for would-be real estate investors. It means that more people are looking to rent, which creates great opportunities for landlords. Also, the rise in rents means that consumers are increasingly willing to make compromises, with the result that areas that were once unfashionable are now seeing a boom in interest. Getting in now, in the right area, where prices are still low, and undertaking minor renovations to make such properties more appealing, means that landlords can command impressive returns.

Biotechnology

The last decade has seen steady growth in the biotech sector and experts agree that there is more to come – in fact, the industry may be on the verge of a boom. That’s because, despite the fact that they have kept productivity growing, several of the major players in biotech have spent the last few years investing heavily in research and development, investigating novel compounds, and tackling diseases which have hitherto had little attention. This is partly as a result of the growth in South American and African national economies, which means more money is becoming available to tackle the diseases of the tropics. As private incomes in these regions grow, and governments invest more in health care, biotech is looking at a major expansion. So, now is the time to get in, at ground level.

Construction

Compared to the above industries, construction may not seem exciting, but it benefits from expansion in practically every other area. The shortage of low-cost housing, in particular, is creating opportunities. There are also an increasing number of commercial construction projects in development, as companies that remained cautious in the aftermath of the 2008 recession, once again begin to expand. Rising interest rates also look set to benefit this sector in 2017. It is ideal for those looking to make investments that will ripen over the next two to six years.

Infrastructure

One sector that has some overlap with construction, and looks set to take off in the shorter term, is infrastructure. Donald Trump’s commitment to investment in this sector is likely to be one of the easiest of his pledges for him to honor, so the chances of significant government funding becoming available are good. There is also pressure for the government to act at federal, state, and city levels, simply because many key areas of infrastructure have been neglected for decades. This has resulted in private companies supporting development in a sector on which almost every other aspect of the economy depends.

Finding your feet as a new investor

Once you have identified sectors of interest, you will still have quite a bit of work to do, identifying the best companies in which to invest your money. There is no simple formula for this, because ultimately, what is important is for you to balance your investments so that you are not carrying too much risk but can still get a decent income from them. The right balance of slow and fast-ripening investments will depend on your circumstances. There are many financial companies that can provide varying levels of service. Take your time and research the different types of investing professionals.  There are robo advisors that provide a more “hands off” approach Or you can work with specialists like Fisher Investments who can review your portfolio and offer higher-touch service model.

Many people begin by investing in sectors that they already know well. If you’re stepping into less familiar waters, though, it’s worth doing some research first. As long as you take your time, you can find good options in almost any sector. Sticking with those listed here should provide you with ample possibilities, and give you the best chance of success over the coming year.


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February 15, 2017 Identifying which markets are worth investment