Stock trading in the United States has experienced an unusual spike in the traders’ population for the first time this year. This growth spike of people coming into stock trading for the first time in their lives is one of the many reactions that has followed the sudden shock of the COVID 19 pandemic that hit the nation. Several people have sought solace in stock trading through economic worries, and this interesting change is worth discussing.
Many have lost their jobs and their livelihood to the economic meltdown influenced by the United States’ pandemic outbreak. Losing the insurance that comes from a pay-check and steady income can make one search for alternative sources of income that are relatively sustainable. Investing in stocks of companies doing great with good dividends after the March stock market crash seemed like the sure bet for investors, and many took it.
It might be quite surprising that stocks are doing very well despite spikes in coronavirus cases having a negative impact on many parts of the economy. Unlike most other businesses that require you to be out there exposed to the virus, stock trading has your money working and yielding income for you while you stay indoors. It appeared to be the solution for the times, and people are cashing in big on it.
Trading stocks is as easy as having a mobile phone or a personal computer requiring little capital resources when using margin or options and seemingly little working knowledge as long as the stock market is rising. Various applications are available for stock traders; an example is the Robinhood application. These applications are almost always free-to-use trading apps with which users can trade stocks and cryptocurrency. Here for example is one new trader explaining how to start out using Robinhoo with a small amount of money with options.
After the first wave of the pandemic hit and the prediction of a second wave, analyses were made regarding the nation’s economy. Different economists projected various outcomes while most felt it would take a lot to bring the economy back on its feet. The protests that were staged nationwide after the first wave of the virus outbreak just made most experts almost sure the economy would be badly hit.
It is still a mystery to most analysts how the economy has responded, unlike it was predicted. Investing in the stock market and the way it has bloomed has contributed greatly to helping the economy. Even with the economic meltdown, people found ways to fund their trading accounts, and stimulus checks received did come in handy.
While the stock markets might have been booming and trading became the center of attention for a stable source of income, the question on the mouths of many is how sustainable this can be. With the hard work being put into fighting coronavirus, a vaccine is expected soonest, and people can resume in-person duties and work. What impact will these changes have on stock trading, and how can traders prepare for this shock?
Jeff Saut recently aired his opinion on the current economy. He said, “The economy is doing a lot better than most of the economists think. I think the economics are going to come out strong, I think earnings are going to do better than most people think. People are woefully under-invested. There’s $5 trillion in money market funds — in money market funds! So, you know, I think the markets are going up. I think they’re going up a lot more than people think. I think, you know, we may stall here for a while into the fall, into September, October, November, but I think you’re going to get a rocket ship coming in the fall of this year.”
While commending how good stock trading has gone, the expert and many others are cautioning on a slip during the fall. However, Jeff believes the market space isn’t maximized enough, and a huge amount of people are not investing as they ought to. This view might be the cue for every potential investor out there.
A great stock market and rise in traders might not equal a great economy and most experts agree that there might be a tug-of-war following the second wave of coronavirus. However, considering that stock trading is technology-driven, the economy might reap out of this one. Considerable preparations are being made, and another hit on the economy will not be as unexpected as the first.
Some experts like Thomas Michaud, CEO, and president at KBW, laid out hat he was watching out for bank earnings, predicting loan losses. There is also the category of experts who believe that the economy might still go down a steep slope, irrespective of stock markets’ success. They think that the sharp increase in stock trading might not be reliable once activities resume fully.
While predictions might not entirely return true as we have noticed earlier this year, they help guide our decisions. Increasing stock traders might currently appear positive on the stock market, but the long term effects are solely dependent on stronger economic factors that might surface in recent times.
-Tim
