In just about three months, the coronavirus managed to spread across the globe triggering an economic crisis in its wake.
Even though central banks and financial authorities are trying to soften the blow with policies aimed at increasing liquidity in the global economy, it is evident that a global economic downturn is unavoidable.
The big question, however, is: How are you as an investor preparing for the looming global economic crisis?
What should investors do?
In the words of Warren Buffet (the oracle of Omaha), the best move is an “attempt to be fearful when others are greedy and to be greedy only when others are fearful”
Fear has gripped the markets and for any seasoned investor, the obvious move is to buy low hanging stocks, shares, and bonds in collapsed markets.
However, while markets can be hard to predict even at the best of times, the coronavirus pandemic makes it even harder to understand. Reports show that investors who are getting back into the market are receiving confusing signals as quarterly earnings continue to shrink and corporate reports provide fewer clues about the future.
The truth however is that while some industries are bound to suffer, some will thrive on this pandemic.
Therefore, the best move for smart investors is to jump on a platform that gives them a leg up in the market in terms of access to a set of hybrid trading strategies in multiple markets and in a variety of industries.
The tomato analogy
At this time, most investors will be tempted to sit on cash and wait.
Even though signs of a market rebound are evident, most investors consider it too early to buy and too late to sell.
However, sitting on cash right now will probably do more lasting damage and here is why.
“Government is the only institution that can take a valuable commodity like paper and make it worthless by applying ink”
This famous quote by the renowned Australian Economist Ludwig Von Misses, on inflation, is the main reason why you should not sit on cash.
Governments erode the value of each monetary unit whenever they expand a nation’s money supply.
As governments across the world resort to extraordinary economic stimulus measures in response to the pandemic, the price of assets is bound to go up.
Here is how it works.
Consider the tomato analogy where you are in a market and have only two tomatoes to exchange with your partner’s two seashells.
In total there are only four items in that market. This means you can swap one tomato for one seashell to the satisfaction of both parties.
However, if two more seashells are discovered in the market while the number of tomatoes remains constant, the price of tomatoes automatically goes up.
Now you will have to exchange two seashells for one tomato. This is assuming you only have access to that one market.
What if you had access to avenues of mitigating inflation? You could probably find the most profitable price for your tomatoes or seashells.
Well, trusted investment platforms like STAX help you do just that.
With STAX you won’t have to settle for the investment options in an inflated market. STAX gives you democratized access to an alternative asset class while enabling you to identify profitable investments even while there is blood on the streets.
What is STAX?
STAX is the first of its kind for raising equity capital in Australia. Its ethos is predicated on bridging the cryptocurrency markets and the traditional securities market. With an investor first approach, the rigorous screening process gives STAX investors access to attractive capital raising opportunities through the utilisation of FIAT or Digital Currencies. STAX connects companies to people and paves a way for investors to make an impact by investing in the early stages of businesses.
At its core, STAX was designed to be an attractive solution for investors. This rings true especially during uncertain times as is the current case with the coronavirus pandemic.
With an investor first approach, STAX allows investors to either use fiat or digital currencies to take part in equity capital raises. This means that FIAT and Digital Currency holders get to invest in companies to create more value in the market thus increasing overall productivity in the economy in the long run.
With this model, STAX democratises access to investors thus lowering the high barrier of entry that locks out startups and small and medium sized enterprises.
The bottom line
Without an inflation-resistant monetary system, an increase in the supply of money in such a system would lead to diminished wealth for investors who choose to hold currency rather than invest appropriately.
As the world continues to fight COVID-19, the jury is still out on whether the market will eventually return to normal after the pandemic.
However, for the modern investor, the current pandemic is an opportunity to identify investment opportunities that can stand the test of time. The best move is to rigorously select investment with recurring revenues and scalable business models even amid an economic crisis.
By bridging securities with digital currencies, STAX offers an attractive proposition to experienced investors as well as new entrants to the investment arena. With the secondary market platform in the works, stay tuned for updates at http://www.stax.exchange.
You can check out their offerings here.