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Some of the world’s most influential business and political leaders have been meeting at the World Economic Forum in Davos, Switzerland and predictably the topic that was at the top of their agenda was the global financial crisis.
However, for some of them it was not all doom and gloom. More than just a few claim that there are opportunities amidst all the adversity.
One such optimist – albeit a cautious one – is Thomson Reuters CEO Tom Glocer who claimed – in an interview with the BBC – that there were ‘spots of light’ in 2008 in the Gulf (Middle East), Asia and foreign currency markets which ‘were very volatile and active’.
And even though he said that ‘2009 is a challenging year’ he also claimed there would be opportunities in the ‘less cyclical’ businesses.
Another area of optimism lies with the growth opportunities that can be found in providing products and services that benefit some of the world’s poorest communities.
According to reports released by the World Economic Forum ‘companies can find growth opportunities among the 3.7 billion people at the “base of the pyramid” (BOP) by adopting innovative strategies that benefit local communities’.
And although this might sound somewhat philanthropical there are some business leaders who look at market downturns with relish. They see an opportunity to increase their market share against a weakened competitor. Others see an opportunity to buy up cut-price assets.
And as for us – as investors – how should we view such adversity?
Well, to begin with there has rarely been a better time to invest in property – in certain markets. There have been huge corrections in prices in the United States as a result of the economic crisis.
In the United States in Q2 2008 there were approximately 739, 714 properties with foreclosure warnings, according to property specialist IP Global Limited. This was an increase of 121.4% on the year before. And the situation looks like it will get worse before it gets better.
As a result of the economic downturn IP Global believes that there are some excellent investment opportunities in property in the United States.
The company claims that well-known locations such as Los Angeles, Las Vegas and New York ‘present, rare, attainable opportunities to get a toe on the property ladder’. The company also recommends looking at places such as Phoenix, Arizona and Palm Springs in California.
The United States is not the only property market that has suffered corrections. Other countries that are worth watching are the United Kingdom and Spain.
In addition to property there could also be excellent opportunities in the overall markets as a whole.
As a result of the global downturn and the overall uncertainty many assets are now heavily discounted. In addition the major stock market indices have taken huge tumbles – London, for example, fell by 31.3% in 2008, while New York was down by 33.84% and Singapore was down by a massive 49.2%.
Although such volatility can be unnerving, for those of us with strong stomachs – and a long term view – such discounts could represent a buying opportunity.
However, no one really knows whether the markets have really bottomed out – not even the business and political leaders in Davos. So perhaps the best way to enter the market is to put aside some of our monthly disposable income in to a regular investment program. By doing this we remove the risk of purchasing at the wrong time.
So, instead of focusing on the adversity, let’s try and highlight the opportunity and make the most of the current economic situation. But – as always – take a long term view.
After all Your Money Matters!
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