Educational articles

6 sectors which benefit from high inflation

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Inflation is the rising price of goods and services. The increased cost of living essentially means you will need to spend more money when purchasing everyday items such as bread, milk, apples, petrol etc. Generally speaking cash would be the worst asset class to hold in a high inflationary environment. However stocks would be a better choice. This is because a company’s revenue and earnings should grow at the same time as inflation. Companies usually pass rising costs to the …

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Why rising bond yields is bad news for the stock market

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Markets in the US and Australia have recently seen some aggressive selling. The unemployment rate in the US hit a 17 year low of 4.1%, and this caused bond yields to spike higher. The combination of strong employment and bond markets anticipating an interest rate hike sent the market into a selling frenzy. These strong US employment numbers could mean high wage demands and rising inflation which unsettled equity investors. Rising wage pressure may hinder company profits due to increased …

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Does the stock market represent the economy?

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It would be rational to think there is a relationship between the economy and the stock market. If the economy is performing well, then it could be assumed that economic growth would enhance the profitability of a company and hence improve their stock price. In a recession, companies can encounter lower profits. This may mean reduced dividends for stockholders and a falling share price.  There have been numerous studies on this argument. One such study performed by Dimson, Marsh and …

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The top 3 sectors when economic growth is strong

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US President Donald Trump’s aggressive tax cuts has been seen as the catalyst for world economic growth. The IMF (International Monetary Fund) predicts the world’s economic growth to be 3.9 per cent in 2018 which is the largest move in 8 years.  If the world is set to experience high levels of synchronised economic growth, then these are the 3 main sectors that need to be on your radar: 1.Industrials Sector This cyclical sector performs well when the economy is …

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10 Ways to have the Mindset of the Successful Trader

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Having good fundamental analysis and sound technical analysis is important in trading but it is also essential to have the right mindset to be a successful trader. There are 10 ways to have the mindset of a successful trader: Keep your day job Avoid losses Admitting you are wrong Don’t be too greedy Keeping to your plan Patience Have realistic expectations Ability to learn from mistakes Flexibility Take calculated risks   1. Keep your day job Statistics are not positive …

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