Several things on the horizon can affect your portfolio. A few of them have known deadlines, and another is an ongoing issue that will need attention. These are the top three for this year.
The 2022 budget
- Stocks will tend to sell off ahead of the midterm elections-Between 1945 and 2021, stocks had an average decline of 1.8% in the 2nd quarter and fell another 0.5% in the 3rd.
- There is significant market volatility immediately before and after a midterm election - This year will likely be the same, with the ongoing war in Ukraine and the possibility of Fed rate hikes. The median standard deviation return of a midterm year's stocks is 15% (2% higher than other years). And the highest deviation quarter is Q3 of a midterm year.
- Stock markets usually bounce higher in the two quarters that follow the midterm elections-Once they see governmental stability again, their worries are lowered, and stocks go up.
These don't always happen, but they usually do, and it does not matter whether there is a change in house or senate control or if the existing state of affairs is maintained.
Cryptos have gained a considerable following over the past two years, seeming to have passed their tipping point (which usually happens when 8-10% of a population participates), with young and old asking which coin is worth investing in.
Many crypto insiders were pleased with the President's executive order, which was the first formal statement about cryptos recognizing their popularity and directing the Treasury Department to develop a regulatory plan with other governmental agencies.
Along these lines, there are two specific items to watch in the coming weeks.
These two ETFs are following suit of the first ETF that was successful in the listing, the BITO ETF that began trading in Oct. 2021.
All three of these funds are for bitcoin futures, not holding the actual currency itself. However, it takes the investing world closer to easy ways for the public to invest in cryptos. The typical ETF or mutual fund investor will have options presented to them by investment advisors that they never had before. This decision could cause a resurgence of crypto investment that could take all things blockchain higher.
All three of these ongoing events could have significant impacts on the markets. Most likely, in the short term, the budget will have a cooling effect for the end of Q1 and into Q2. But mid-Q2 will see the volatility increase through Q3 until just after the election. We will hopefully then see the post-election positive trend that has been seen in years past for the coming years leading to the 2024 election. In the long term, the decisions of the SEC will likely have a massive impact on the crypto world and its continuing trend, either up or lacklustre, for years to come.
The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.