A Decade Of Trading And Global Markets

Posted by James Hughes -
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Trump’s New World

A decade of trading highlighted that money revolved any stock related to governments. Governments have been short as the rise of populism has taken hold. Donald Trump has painted a target on the world’s largest economies as he looks to “Make America Great Again”.

In fact, although he only took office in 2016, it feels like the whole decade of trading and business moves has been dominated by him. The trials and tribulations of the Trump Administration will go down in history. Beginning of December 2019, he became the fourth President in American history to have impeachment proceedings started against him.

One thing that can’t be questioned is his effect on the economy since the 2016 inauguration. On inauguration day the Dow sat at 16,446, slowly recovering from the financial crisis of 8 years previous. At the time of writing, as Trump prepares for the impeachment hearings as well as the start of his re-election campaign, the Dow sits 11,905 points or 73% higher at 27,911.

As we know, it hasn’t all been plain sailing up to this point. At the end of the decade, the Fed is cutting rates despite the economy booming. Moreover, China continues to put the global economy under pressure as demand falls and Trump faces the threat of impeachment. However, the end of the 2010s looks like it will finish on a strange, historical, but ultimately positive foot.

A Decade Of Trading – Tech Stocks Dominate

The financial crisis of 2008 changed the financial world, saw millions lose their homes, and even more lose their jobs. It ushered in a new world order where the dominance of big oil and big banks ended, and startups and tech took over. Within the three years between 2007 and 2009, the US stock markets saw $8 trillion wiped from its value.

The recovery needed to be strong. However, it also had to do nothing with the so-called ‘criminals’ on Wall Street who brought financial ruin. Upstep Steve Jobs, Mark Zuckerburg, Reed Hastings and Jeff Bezos. Tech was the new blockbuster of Wall Street. No longer would we sit and wait for bumper earnings from the big banks for the Dow to jump 100 points. The FAANG stocks were born, and they haven’t looked back since.

Facebook IPO May 2012 $38.23 – December 2019 $194.45

It had its issues and fights with the Government, but Zuckerberg explained how the internet works to Congress in a now-viral video. However, the social media giant has gone from strength to strength over the last 7 years since its IPO. Questions asked how the company would be monetized. However, everyone using Facebook (and that’s a staggering 2.45 billion people monthly) knows that the company has changed. Videos and advertising have been well integrated into the platform. It’s no longer about friend requests and pokes, but more about advertising and money. The latter is reflected in the share price and the returns you would have if you’d have bought on the IPO.

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Apple January 1st, 2010 $30.80 – December 2019 $275.15 – +838%

A few stats:

  • iPhone sales 2010 – 2019 – 1.4 billion
  • iPad sales 2010 – 2019 – 440 million

A decade of trading includes Apple for sure, and of course easy to say as we sit here now. A rise of 838% in the company’s share price says all you need to know. The advancement in technology and the world’s continued obsession with the smartphone meant that there was no sign of this slowing down. However, of course, we must remember that it’s not just about the iPhone, as in fact, Google Android devices outpace the iPhone aggressively across the world. However, Apple’s loyal legion of fans will still queue and spend on the suite of devices.

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Amazon January 1st, 2010 $128.57 – December 2019 $1760 – +1168%

You can sense a theme here. You missed out on a big one. Tech stocks have done pretty well. I wish I had bought some! I wish I hadn’t sold so early!

These are the common musing of an early adopter of the tech stock movement. However, the boom years are over. They can’t keep going up. Remember the Dot Com boom. It’s a bubble. These are another few aspects not considered when discussing the FAANG’s.

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There isn’t much to say about Amazon over the last decade. You can buy everything from one place, and the world has gone absolutely insane for the all-in-one place solution. Add the normal Amazon market place to the other products the company owns, Ring doorbells, Alexa devices, Kindles all of these products have skyrocketed in sales and helped to drive the company on. Prime has now also branched out and is a huge part of the online streaming world, directly challenging Netflix.

Netflix January 2010 $15 – December 2019 $304.53 – +4874%

Another stock and trade that needs no introduction. Despite not making profit for what seems like forever, Netflix share price continues to go from strength to strength to its high back in June 2018. A trade at the very start of the decade would have seen you bag a modest 4,878% gain.

The company now has almost 160 million subscribers worldwide and continues to grow. However, the landscape is changing, and competition is springing up from all different angles. Amazon Prime remains the major competitor. However, film studios are starting to pose their own threat by withholding content and creating their own streaming services, Disney+ being the big one here.

For that reason, it’s been the creation of the Netflix Original content that has really helped Reed Hastings firm take-off. Binge-worthy TV series are now the new Hollywood blockbuster. This was, in fact, the master-stroke of taking the popular TV show Breaking Bad from TV to online that proved the masterstroke. So even with increased competition Netflix is still the first on many portfolios.

Google January 2010 $312.51 – December 2019 $1361 – +334%

Over the last 10 years, Google has become so much more than a search engine. Don’t get me wrong, in the search engine industry it has taken over, and the verb has even been adopted into the Oxford English Dictionary.

Android operating systems are another main driver of revenue as stated above in the Apple section. Devices using the Android system outstrip that of IOS (Apple operating system) by a surprising amount. Android devices have a whopping 74% of the global smartphone market. But still, that isn’t the main revenue stream. Advertising remains the biggest earner for Alphabet (parent company of Google), and this shows no signs of changing. Google’s Q3 earnings were $40.3 billion.

The Brexit Trade

Over the last 10 years, the global economy has had to fight its way out of multiple scraps, most notably the financial crisis of 2008. However, as we entered the new decade, we saw not only the aftermath of the Sub Prime Mortgage debacle but the start of the Eurozone crisis.

The European Debt Crisis saw several eurozone member states (GreecePortugalIrelandSpain and Cyprus) unable to repay or refinance their government debt or to bail out over-indebted banks in their respective countries without the assistance of third parties like other eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).

Brexit

The truth is that Europe has never fully recovered from the debt crisis when Donald Trump and the UK started its offensive. The Trump story was simple, and nothing we hadn’t heard before. The administration wanted a better trade deal and wanted things their own way, so tariffs came in place. The Trump-inspired US-Europe trade war will be a major focus for the early 2020s.

The UK side of this argument was very different. It was a sound voice of rising populism that saw Donald Trump come to power in the US. The normal hard-working person had enough of career politicians and felt that the leaders no longer spoke for the masses. It was this feeling that saw Donald Trump become President. Additionally, the same sense of exclusion led to the UK voting to leave the European Union in 2016.

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Is Brexit Ever Happening?

Sterling has always been the market-correlated battleground for Brexit. However, what has been interesting has been the way the currency has flipped in what it wants. The indecision in the pound has almost been as bad as the indecision in the UK’s House of Commons.

The initial reaction was rational. Yet the economic impact is still likely to be negative in the UK, at least in the short term. However, the truth behind all the headlines is that nobody really has any idea. Remainers will tell you Brexit will be the worst thing to ever happen to the UK. Brexiteers will champion the impact on the country.

It only became clear in December’s UK general election just how deep the indecision ran. The Sterling jumped from 1.3010 to well above 1.3450 on the Exit Poll. That Exit Poll was pointing to a Boris Johnson led Conservative Party majority. It was also pointing to a guaranteed Brexit, the same thing Sterling had tanked on only 2 months earlier.

The 3 years’ worth of political infighting which led to the economy stalling and the Bank of England cutting interest rates also caused Sterling to have one of its most volatile times since the turn of the century, and it’s not over yet.

Next Decade Of Trading

We start the next 10 years with the same stories and themes running through global markets. Donald Trump remains at the top of the pile. His trade offensive on China may be nearing completion, but that just means Trump will focus his all-seeing eye on the next target, which is likely to be Europe and its auto industry.

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Of course, there is no guarantee that Trump will be in the White House come inauguration day 2021. However, he is currently 5/6 on to win next year’s election. That’s of course if his impeachment does not go through. Again, bookies think there is a 20% chance of impeaching him, and an 8% chance he will resign the Presidency.

Whatever the outcome, all we know for sure is that the Forex, stocks, commodity and treasury markets will see some unrivalled volatility in the next 12 months let alone the next 10 years.

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