US stocks, oil, and gold – are these the instruments to look for the rest of the year? - September 18, 2019

US stocks, oil, and gold – are these the instruments to look for the rest of the year?

Not all instruments perform the same: some do better while some do worse. We often talk about how a conscious investor should act on the market. Now we focus on instruments that are expected to perform better for the rest of the year. JP Morgan’s and Goldman Sachs's pick are US stocks, our favorite is gold, and oil can be boosted by a sad incident.

Trying to predict what happens on the market is as old as investing itself. Sometimes there are telltales, or more precisely historical knowledge and data that helps us doing this. Let’s see what we can expect for the rest of 2019.

Big money bets on US stocks

According to CNBC’s article, JP Morgan told clients last Monday that “We now believe that (the) market will advance into year-end”. Although they acknowledged that the US stock market had some volatility in the last months, they’re still betting on it. They also noted that rate cuts are rarely followed by a recession. What’s more, equities usually perform strong after six and 12 months following a rate cut.

Goldman Sachs in the meantime told its rich clients to stay with US stocks, because it’s too early to quit, according to Bloomberg. The article noted that it’s surprising how many investors stayed away from stocks because of fear, missing a serious opportunity for decent returns.

All this makes them believe that trading US stocks is a good idea for the remainder of 2019.

Gold is our pick

Gold is always a good idea to invest in. Especially when market fluctuations are present, like they are on the stock markets lately. As we said several times before, precious metals are safe haven for investors. That’s why when there are uncertainties, investors turn to gold. And they are obviously turning to it, as it hit a 6-year record high in the last weeks.

The precious metal also has the capability of keeping its value on the long term, therefore its often better than any other instruments, especially cash. We firmly believe that it can have an important part of any investment portfolios as a tool for diversification. (See: Diversified investments? Gold should have a role in them!)

So we pick gold as something to look for for this year.

Oil hit by an attack

The last instrument every investor should keep an eye on now is oil. During the weekend there was a serious drone attack on one of Saudi Arabia’s major crude facilities. After the attacks, the field stopped oil production, leading to a loss of 5.7 million barrels a day. That’s alone 5% of global production, so it’s easy to see why this is a serious event on the market. Although production will be returned to normal levels, prices will feel the shortage.

A $5-10 rise in Brent oil prices is already a reality. Price is around $70 now, which is a serious, 10% jump from what we’ve seen in the last months. This is, however, probably just a one-time jump. Still, Saudi Arabia is talking about a risk-premium for oil production, which may further rise prices.

In a situation like this, keeping an eye on this commodity is a must.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.