There are two words that can send shivers down the spine of a stock market investor; Market volatility. This is because the global stock markets are directly tied-in to the inflation rate. Whenever inflation rates rise, the overall stock market values decline.
In the last five years, the markets have been extremely volatile in the wake of the Global Financial Crisis that devastated many global markets, and crippled the world economy. Millions of investors lost billions of dollars leading to (what some people are calling) The Great Recession of the 21st century. Unfortunately, there are still some lingering negative effects, particularly highlighted by the financial/economic problems currently being experienced in Greece and Cyprus.
There once was a time not long ago, when the only choice investors had was to take a gamble on the stock market and fill their portfolio with shares. Thankfully that strategy has become less popular with the emergence of an increasing number of alternative investment opportunities, that are proving they can consistently outperform the traditional offerings and in many instances provide a hedge against any threat of inflation. Nowadays, investors have lost their confidence (not to mention a lot of money as well) in traditional investments, and are beginning to take advantage of the many profitable alternatives that are dominating the investment landscape.
Most alternative investment options are not correlated with stocks and bonds and as a result are not negatively affected when the inflation rates go up. In fact, the opposite happens. Their value actually increases making them a great addition to any investor’s portfolio. In fact, many established investment advisers and firms are now strongly recommending that a well-balanced portfolio contain a large measure of alternatives, to protect it against under-performing stocks and volatile market conditions; which are likely to lead to high inflation rates.
The investment landscape is definitely undergoing a massive shift as global alternative investments are now valued in the trillions of dollars annually, and the trend is expected to continue for years to come; particularly as the global economy continues to grow. For the longest time, the traditional method of investing into stocks and bonds ruled the financial world. While they didn’t always deliver a great investing experience, they were the only option at the time. Thankfully nowadays times have changed, and investors have discovered a wide range of profitable alternatives to choose from.