Buying the hype – Are baskets a solution to bubbles?
The events and turbulence of this year need no explanation. The global pandemic, US election and everything in between have sent dramatic waves across the markets.
With so much volatility and uncertainty rocking the markets, stocks have continued to break records and climb to new highs and equal lows throughout the year. In response, increasing numbers of traders have been entering the stock market at scale, seeking to hedge their bets as lockdowns were imposed across the world.
Technology, pharmaceuticals, Environmental Social and Governance (ESG) have all recently dominated market news in their appeal as exceptionally lucrative stock choices this year. As trading is more accessible and simpler than ever before, the hype and fear of missing out is hard to ignore.
The dot com bubble – the memories no investor wants to relive
But with high-climbing numbers, you do not have to look too far to see bankers as well as analysts drawing comparisons between today’s markets and the dot com bubble, pronouncing warnings for new and experienced traders alike to beware.
Such references are sure to be ominous for traders old enough to remember the dot.com bubble – but perhaps less so to the sizeable number of millennial investors in the markets today – where the NASDAQ fell nearly 78% between March 2000 and October 2002 and did not recover until 2015, and where many internet and tech companies went bust nearly overnight. Investors across the board saw huge losses.
It is no surprise that these sorts of allusions get investors nervous when tech stocks today are among the most sought-after and popular investments, accounting for 40% of companies listed on the S&P 500. As well as the continuing concerns with tech stocks, we have also seen some other notable cases of stock bubbles developing this year, such as Korean biotech, and more recently, ESG investing. Whether these are bubbles ready to burst or false alarms is yet to be seen – but perhaps we should not leap to brand every trend a bubble.
Swapping bubbles for baskets
Thankfully, troves of investing opportunities remain to be seized. For new traders beginning to navigate the opportunities in such a unique and overwhelming market environment, and for experienced traders looking to diversify their portfolios, a range of tools are available.
For many, Stock Baskets could provide a compelling yet simple solution. Stock Baskets are a carefully selected range of CFD shares across a particular sector combined into a single tradable instrument. As such, they make for an affordable and simple, way to bet on the performance of industries as a whole while simultaneously mitigating the risk of over-exposure to a single company. With a few baskets in tow, the exposure can be spread even wider across several industries.
Thanks to these, the overwhelming tasks of researching entire industries, separating hype from performance and picking a single company are eliminated. With just a few taps, a trader can open a position on the best performing industries, on the most well-known names in equities, quickly and easily.
The right broker, in turn, will provide traders with a meaningful range of choices in trading across industries. Sure, tech is hot right now, but so is E-Sports, pharmaceuticals, finance, and e-commerce. For those worried about tech stocks but still wanting to profit from the volatility, these could be way forward. There are plenty of winning bets to be made and profitable positions to be opened, as much as with tech stocks as with other industries.
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