The overall financial health of the global economy, as well as the resources we have available to make intelligent projections, will greatly impact business success in 2019. Let's have a look at two of the major market trends to expect this year.
Continuing Stock Market Volatility
We enter 2019 with the financial sector in a bear market. (A bear market is an economy in which security prices drop 20 percent or more and stay low for a long time period.)
The 2018 market was volatile and the stock market is currently in the correction process. The most critical factors relating to stock market volatility are trade policy and interest rates.
“The trade war can expand suddenly into multiple industries and cause spillover effects," says Juan Carlos Arancibia, markets editor for Investors Business Daily.
What does this mean for your business?
In the simplest terms, market trends indicate a sluggish economy—you should pay closer attention to your finances to avoid unnecessary losses. When it comes to investing, try to avoid having a knee-jerk reaction. If you can, stay focused on your long-term goals even if the pull to sell is strong.
On the customer spending side, if you are in the business of non-essential products and services, you can expect sales to decrease in a bear market. You may need to adjust your offering so that it's more in line with what customers need today.
Finally, it's a good idea to decrease your own expenses so that you don't need to borrow more money during this time. Due to rising interest rates, be very careful with new credit lines so that you don't get into an irreversible debt cycle.
Another of the critical market trends is trade policy. Keep an eye on new tariffs being issued by the U.S. government. A tariff is a tax on an import or export, and recently, we have seen new tariffs levied on goods coming from Canada, Mexico and the EU—not to mention China. These tariffs can increase costs, but you should balance how much of these costs you can safely pass on to your customers (i.e. through raised prices) without damaging your cash flow.
For more of what to expect this year, head on over to the American Express Business site.
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