If you’ve ever felt bummed because your savings aren’t growing more than 5% a year, you’d be shocked to learn that stocks all over the world have been growing twice as fast in recent months. But should you transfer more of your savings into stocks now?
Experienced investors and stock market experts in the UAE suggest it might be a good idea. Their advice is backed by new data that shows savers worldwide are quickly moving their money to stocks, and as a result, the prices of these stocks are going up. “After a tough year filled with high inflation, increases in interest rates and worries about a recession that hit stocks hard, the market is now bouncing back since these worries are lessening in 2023,” said Brody Dunn, an investment manager based in the UAE with over 20 years of experience.
He added, “Stocks around the globe have seen a growth of over 10% in the past three months. The most extensive index of global stocks from MSCI went up almost 7% just last month. So, this could be a great time for those who are looking to earn more.”
Why are stock prices going up all over the world? Will this continue? Experts believe that the recent growth is partly due to a poor performance last year when investors sold off their stocks to avoid more losses due to bad economic conditions.
“Investors worldwide are returning to the market now as inflation is going down in most major economies and rate hikes are slowing down. Even though some market problems still exist and there is a threat of a global recession, investors are not holding back,” Dunn further explained.
Despite differing opinions on whether stocks will keep growing, it’s evident that the market has been surprisingly strong, offering a sense of security to your investments. But if a global recession occurs, it could affect stock markets around the world. During the last year, central banks worldwide increased interest rates to reduce inflation but at the risk of slowing down global growth, which could lead to a recession.
The potential global recession might be a cause for concern for investors. During a global recession, stock prices usually fall because people are less likely to spend money, which means businesses make less profit. However, even though stock markets tend to become very unpredictable during a global economic downturn, financial experts advise investors not to withdraw their investments in a panic.
Right now, there are very few signs that a global economic downturn is imminent. Global stocks have been doing well recently, and smaller stocks have also begun to rise slightly. This suggests that investors are becoming more willing to take risks.
So, is now the best time to buy stocks or should you wait? If you’re investing for the long-term – say five, ten, or forty years – then now is a great time to buy stocks. “Waiting for a drop in stock prices won’t make a big difference in the long run. A 10% price difference now won’t matter in 40 years when your original investment has grown more than ten times.”
Even if you like to thoroughly research stocks and finding good buying opportunities is more challenging when the overall market valuation is high, that doesn’t mean those opportunities don’t exist. Whenever you find a stock that you believe is undervalued by the rest of the market, that’s always a good time to invest.