Every new year brings about new trends, especially in the financial sector, where recent volatility has sent markets swinging from one way to the other. If you’re looking to get into this sector, it is these new trends that you will need to pay attention to.
Building a new, strong portfolio, specifically, will depend on how much you know about the market and what is likely to happen over the next twelve months. Thankfully, a lot of these trends are already identifiable, and to help you out, we’ve listed five of the most important below.
Geopolitical Risk Will Continue
The first thing to note is that geopolitical risk to the financial industry is going to continue. Last year saw a number of events drag the economy and shake investor confidence, and although there are still opportunities to be had, it’s unlikely that none of them will be affected by further geopolitical events in the near future.
AI-Driven Investment Will Rise
That’s why this next trend is so important. Although AI-driven investment has been with us for a few years, the technology has only gotten better, and with AI being the new global buzzword, smart AI investing is sure to get even more popular in 2024.
One example of an effective application of AI can be found in FINQ. FINQ has become a big name in investing thanks to its use of AI as a platform for enhancing data processing and qualitative analysis of key sources like analysts and social media as well as assessing true value and risk, making it possible for investors to make informed decisions regarding not only on what to buy but what to sell and when through better opportunity identification, strategy building, ethics governance, and decision validation – to name just a few! In this way, FINQ is demonstrating a future that we all wish to reach – one where AI is able to be leveraged alongside human capabilities. FINQ is also signposting the ways in which this working relationship with AI can be utilized across key verticals, giving us all a stronger underpinning through this burgeoning technology.
With this technology, the future of financial services and AI data analysis is looking bright – and much closer on the horizon than we might have thought.
As a Result, Investments Will Rise
With this in mind, it is likely that more people will be joining the stock market in 2024. We mention the stock market specifically because multiple bank failures in 2023 have done their job of spooking consumers and investors, leaving the stock market as the safest bet to attain strong returns.
With AI technology helping to simplify the process and give investors the best chance to outperform the market, plenty more people – from Gen X all the way to Gen Z – are going to be getting involved.
Mid and Small Caps are Going to be Popular
But what will they be investing in? Well, it’s likely that the biggest 2024 trend will be mid-to-small cap companies. This is mainly because they weren’t the biggest winners in 2023. Dubbed the ‘Magnificent Seven’, AAPL, AMZN, GOOGL, NVDA, META, MSFT, and TSLA all posted monumental gains last year, and because of that, their premiums have gone through the roof.
Waiting in the wings, however, are the mid and small-cap stocks, many of which have underperformed over the last few years – 19.5 times compared to their average 20-year price-to-earnings ratio of 21.3. Being well-positioned to accelerate their earnings makes them great opportunities for investors looking to take advantage.
New Year, New Climate Outlook
Lastly, the spotlight might be about to glow even brighter on climate action, with a number of financial investments and funding pushing climate tech companies further in 2023.
This year, there will be even more demand for energy grid innovation and affordable, green electricity options, and this could spur even more investment in the companies looking to deliver. It’s a new year and – fingers crossed – it’s a year that could be the greenest yet.