How to Effectively Spot Investment Opportunities

Side-step the hype

How to Effectively Spot Investment Opportunities

A famous quote from a 90-year old US investor, business tycoon, philanthropist, and the chairman/CEO of Berkshire Hathaway, Warren Edward Buffet, goes: “Remember that the stock market is a manic depressive.” These are wise words, reveal the experts at

In fact, they believe that this sentiment will ring true for any consumer of the daily financial news in any country around the globe. “Equity markets swing wildly from day to day on the smallest of news, rally and crash on sentiment; and celebrate or vilify the most insane data points,” they write. The lesson? Don’t get caught up in the hype, and rather do your research and act on rational information. For aspiring traders, there are a wealth of online resources available. You could check these option trading books, or find a host of interactive tutorials and trading simulations. Taking advantage of all the great online tools is essential for staying informed on what is happening in the markets.

Yes, trading online is made easy when you make it a habit to devote a little time each day towards doing your homework on reputable websites, flipping through much financial literature to which you may subscribe, and chatting to fellow financial aficionados and/or your choice in a professional advisor – perhaps via a weekly Zoom meeting, or through a chat group for those whose opinions resonate with you.

Emerging markets for the win

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A recent article suggests you can’t go wrong with the emerging markets, these extending to South Korea, India, Mexico, Brazil, Russia, Taiwan, Thailand, Pakistan, Saudi Arabia and China – as just a few of the most vibrant alternatives. Why? Because, over the last three decades, these markets “have provided return enhancement and risk diversification opportunities for numerous global equity investors”, says an MSCI research paper entitled “The Future Of Emerging Markets: 30 Years On From The Launch of MSCI Emerging Markets Index”.

For those who’ve been focused on first-world markets and stock exchanges for way too long, let’s set the scene on emerging markets. An emerging market economy, advises, refers to the economy of a developing nation striving to engage more fully with global markets as it gains impetus. It’s all about transitioning from a low-income, less-developed space to emerge a modern, industrial and digitally powerful nation that can offer a much better standard of living to its citizens.

Your investment pointer: while we may no longer want to lay all that’s wrong with the world at the feet of the COVID-19 pandemic, there’s no denying that it is still causing economic strife on a global scale. A positive spin on this: a weaker dollar, better valuation, earnings growth and economic revival presents a combined “hot potato” to steer your investments into the nicely diversified space of your favourite emerging market.

A mindset worth cultivating

Still unsure about the emerging markets as an investment strategy? Here are a few reasons to reconsider. Firstly, you’ll be investing in an economy that is transitioning from emerging to developed. Next up, such economies tend to provide a “unified currency, stock market and banking system” because they are becoming industrialised at a rapidly increasing rate. Their growth and development can provide intelligent investors with amazing returns, unlike anything they are likely to see in the first world.

But, before you take the plunge, it’s time to tap into your “trading brain”. According to Norman Welz, a German psychologist and journalist keenly focused on the stock market. You may wish to consider the following before you leap into the financial unknown. Do a little research on how to cultivate a trading mindset – which he reveals is the ability to take your time and follow your gut (that little voice inside, if you will), rather than being overly focused on “charts and trends”. While the saying goes that your pride is, at times, something to kick far under the bed, the same can be said for any heightened emotions that may arise when you sit down to make your investment decisions.

Five strategies to consider offers up five investment strategies that you can turn into a winning approach. These are: (1) go in for stocks that are cheaper than they should be – patience is a virtue, after all; (2) seek out securities that pay out returns on a steady schedule – activity in the buying and selling is a good thing; (3) nab any shares that are exhibiting above-average growth (do some weekend reading on “capital appreciation); (4) remain under the radar with small-scale stock that seems poised to skyrocket when least expected; and (5) set about building a portfolio that exhibits goodwill as regards to its social conscience. Note that everyone loves investments – and individuals – who protect the environment, along with those less fortunate, while remaining competitive alongside their non-socially conscientious peers.

According to the experts, spotting investment opportunities is very much like buying property for a portfolio. You don’t want to have to sell it in a hurry. Instead, you need to know how to decide on your investment horizon, the possible returns you may be able to score, your preferred risk profile (high, medium or low), and so on. Advice from a trusted financial advisor will never go amiss if you’re feeling indecisive.

These techno times

Agreed, COVID shot the modus operandi of many seasoned investors way out of the ballpark – and not in a good way. But is clear that the months of 2021, which lie ahead, will signal “The Reopening Of The Global Economy” – and what a relief for those keen to get their investment portfolios back on solid ground. So steer your vision towards “technology, commerce and healthcare”, as their rapid evolution post-pandemic cannot be ignored.

And how about the rapidly transforming society in which we are all immersed but may not fully have taken in due to an extended amount of time in our homes? writer and CIO of Hennion and Walsh Asset Management, Kevin Mahn, believes society is likely to keep on communicating, working, shopping and educating our youth more remotely than has ever been the case in the past. So even if you know little of the finer details of “artificial intelligence (AI), robotics, blockchain and even 5G”, these industries are going to continue to prove critical to individuals, corporations and governments as time marches on.

You therefore can’t go wrong by placing your hard-earned money in well-run and well-positioned technology stocks.

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