I hope we all had a great memorial day weekend! Hamburgers, hotdogs, sodas, and sun… It was a great time for Americans across the country. This time one year ago, most of the country was in lockdown and everyone was at home. Today, we are together having fun indoors and outdoors. Although no one has outright said it, many can feel the covid pandemic is coming to an end. With this will come a faster moving economy. More money being spent, money moving around, and more business being conducted. So what does all this possible action in the future mean? A heated economy?
Money Spent is Money On the Move
We can all see that our life is returning to how it used to be. NYC is even set to be fully reopened by July. What this means is that money will likely flow back to products that are a part of our normal lives. Last year, due to the lockdowns, money went towards online services like Amazon or was simply saved. This year, we might see money move back into physical services. This could mean a rise in inflation if this change happens quickly which would create a heated economy. Overall, it is important to keep our eyes on where money is being spent now so we can predict what may happen in the future.
My Thoughts
Knowing where money will flow can yield you some money in the stock market. Now is a great time to start thinking of industries that were affected by the pandemic. See if there is a likely chance that money will come back to those industries. If you think that money will flow back into that industry then congrats! You just formed your first financial hypothesis. Now you can move forward and research your idea more. Fully developing your hypothesis into a full blown thesis is important in understanding the opportunity. Once you have a full fledged thesis you can decide whether or not the opportunity is worth the risk.
Events like these happen all the time in financial markets. Perhaps on a smaller scale but they do happen every day. Noticing events and connecting them to business is part of understanding finance. The more you practice this skill the more aware you will become of all the events affecting businesses every day! Perhaps with enough practice you might be able to see a possible effect before wall street does. The key takeaway here is events that affect cash flow will affect business. So, start looking at the news and writing down your hypotheses. The only way to get better is with practice!
Check Out Our Article On Inflation Affecting the Market!
The Common Trader 