No other stock market in the world performed as the United States one. An educated person might compare it to the Chinese stock exchange, but if you consider the security and political threats then the discussion may halt immediately. If you are a beginner investor from anywhere in the world, your first consideration should be the US market, and then perhaps your native country. In this post, we are discussing the reasons why that is the case, and how to invest with the highest ROI.
Why The Land Of The Free?
American companies, out of all corporations in the world, grow the most and make the bulk of all money. Why is that the case? Simply put, in the current day and age, innovation comes from technology. Shell(the oil and gas company) still makes a lot of money, and they will continue to do so as long as people need gas and oil. This may not be that long, after all, considering all the trends pointing for the “greener” alternatives. The high-tech industry is definitely heading up, while we can’t say the same for others.
If you compare Alibaba( a Chinese company) and Amazon( US-based), what is the main difference? You may look at the price difference( which is more than ten-fold per share), or the revenue generated by these companies( the US company earns a revenue four times of its Chinese counterpart), but that’s not the first question that should pop into your mind. It should “what will happen to this company in 5 years?”. China, as much as it may seem like a lucrative option, is not currently so. Because of its communist government, all of the businesses in the PRC are under constant threat of closure, “reform”, change of operations, or major rapid decline. They might have to stop doing business with foreign countries at any moment. Imagine what a stock decline it would be? Yes, they dominate their own land, but that’s about it. Even when you buy Alibaba shares on the NYSE, there is no guaranteed ownership of the stock, because the Chinese government may walk away with all of your money at any moment.
Do you know a single European high-tech company? If so, you are in luck. But for the majority of people, all the companies they know come from the US. And you should never invest in something that’s not close to you, or an asset you don’t understand from tip to toe. For beginners, it’s not recommended to invest in stocks less reputable than those in the SP500 Index.
Let’s take a look at Japan for example. This nation is widely known for its high-end technologies. The citizens are true workaholics, producing a high one of the best automobiles, household electronics, portable computers, and their counterparts. Japanese industry is also full of high-quality chemical production, used in the biochemical industries.
By no means this nation’s economy should be falling or in decline. However, with multiple economical bubbles bursting in the ’90s, the country’s stock market recovered only this very year (2021). What happened when all the US bubbles burst? Major indexes such as Dow or Jones Industrial plummeted, but they recovered mostly or even rebounded in a span as little as five years. It took the Japanese stock market more than thirty to do that. Which one seems more reasonable to you? To learn more about this particular comparison, head to the Japanese website: https://www.kurashinofinance.com/covid19-shisanunyou/ and check out the latest articles, which have covered the theme widely.
So What Do I Invest In?
Over the span of your life, you may or may not have developed expertise in a particular field. If yes, that might be of great service to you. Let’s take a computer specialist for instance. He must know a lot about computers themselves, and all the other technology areas that he has interacted with. That means that this person has way more insight into the market than your average Joe. Thus, his knowledge may help him make the best decisions in regards to the stocks that are connected to his area of thinking. He may purchase the Nasdaq composite, and monitor it, or buy out individual company shares that he deems are going to be successful in the future.
But let’s say you are an oil or textile expert. You can thus invest in oil companies, the ones that seem to be doing their best to your professional eye and gut feeling. Whatever it is that you have great knowledge of, is a great way to invest your money. If you don’t know basically anything about the food industry, then investing in Heinz might be an incorrect decision, which will lead to potential losses and losing capital.