In a k-shaped recovery different parts of the economy recover at different rates or perhaps not at all. The question of investors is what are the long term effects of a k-shaped recovery on your investments?
https://youtu.be/SK5CiPqKZis
America Is the Target; Israel Is the Front Line _ Andy Blumenthal _ The Blogs...
Long Term Effects of a K-shaped Recovery on Your Investments
1. Long Term Effects of a K-
shaped Recovery on Your
Investments
By
www.ProfitableInvestingTips.
com
2. https://profitableinvestingtips.com/profita
ble-investing-tips/k-shaped-recovery-
investments
The economic recovery from the Covid-19 crisis
is turning out to be a classic “k-shape.” In a
k-shaped recovery different parts of the
economy recover at different rates or perhaps
not at all. The question of investors is what
are the long term effects of a k-shaped
recovery on your investments? This year tech
giants like Apple and Microsoft have done
very well as the world pivoted to working and
staying at home. Travel and hospitality
businesses have done poorly and are not
recovering anytime soon. What does this
situation tell us about the long term for
investing?
4. https://profitableinvestingtips.com/profita
ble-investing-tips/k-shaped-recovery-
investments
Investopedia explains what a k-shaped recovery
is and why it matters. During a recession,
economic performance generally falls across
all sectors although some sectors may be hit
worse than others. And, when the economy
recovers, all sectors tend to join in at varying
rates. What makes a k-shaped recovery
different is that some sectors promptly begin
to recover like the tech sector in 2020 while
other sectors like hospitality and travel
continue to fall. The questions for investors
are if the climbing sectors will continue on
their path and when the falling sectors will
recover, or if they ever will.
7. https://profitableinvestingtips.com/profita
ble-investing-tips/k-shaped-recovery-
investments
Those who stayed in, or purchased, big tech in
early 2020 have done very well during 2020.
Extremely low interest rates have helped as
has the pivot to working at home and social
distancing brought on by the covid-19
pandemic. Going forward, there should be
some concern about how long big tech can
continue their current rate of gains. We are
seeing increasing concern about big tech
monopolies that could lead to breakups. And,
when interest rates start going again, it will
tend to put a damper on rapid stock market
growth.
8. https://profitableinvestingtips.com/profita
ble-investing-tips/k-shaped-recovery-
investments
For the falling sectors of the market, the
general expectation is that there will be an
eventual recovery. But, companies without
sufficient reserves or credit may simply go
out of business or be taken over for pennies
by their competitors. Investors will need to
accurately pick the survivors who will benefit
from a world free of covid-19 and renewed
economic growth. That will require more than
glancing at a k-shaped recovery graph and
the use of intrinsic stock value as a guide
going forward.
10. https://profitableinvestingtips.com/profita
ble-investing-tips/k-shaped-recovery-
investments
The Financial Stability Board issued a report regarding
stability and the covid-19 crisis.
Global financial conditions have overall continued to
ease since the G20 meeting in July on the back of the
decisive policy action taken earlier this year. However,
risks to global financial stability remain elevated.
Financial conditions may remain vulnerable to sharp
shifts in investor sentiment. Deteriorating credit
quality of non-financial borrowers poses risks to the
financial sector. The intensification of the pandemic,
together with the resulting necessary government
containment measures as well as greater uncertainty
about its duration, is increasing vulnerabilities in the
non-financial sector.
11. https://profitableinvestingtips.com/profita
ble-investing-tips/k-shaped-recovery-
investments
Loan losses experienced by banks will affect
future credit availability and investor
sentiment may swing to the negative if
investors believe that the stock market party
is over. The huge amounts of government
debt coupled with “zombie company” debt
create investment risks going forward.
Investors who have profited from the tech
rally in 2020 may benefit from taking a little
off of the table while those who have avoided
dull consumer goods stocks and utilities may
benefit from accepting lower investment
returns in order to provide a little investment
security.
