Should you be looking to buy shares this year?

With the US and Iran launching missiles at each other and the UK going through Brexit, the question that arises is that is it the best time to be looking to buy shares in businesses? Should you be looking to spend some of your savings in the large corporations in the hopes that when political insecurities die down that you could make that sweat profit back?

To really understand what time is the best time, we need first answer the question as to what shares are and how they work.

What are shares?

Shares represent ownership of a company, 1 share is like a seat. The more seats you have in parliament the more powerful you become, it works the same but in terms of shares. The more shares that you have the more of a say you have in company decisions. Yes, we refer shares to be with the stock market, but for some small business, shares are given in exchange for a sum of money. All these are under laws determined by your state or province. When a company decides to release shares onto the stock market upon release they offer an IPO (initial public offering) with a total number of shares. Releasing equity can allow a company to raise money in return of power in a company.

How do politics affect shares?

If we take for example the UK minimum wage is £8.20, if for some reason the government released a new law that said that the UK minimum wage is now £11.50 this would cause a lot of big companies a lot of trouble as their profit margin would be reduced (this is, however, dependant on how much staff the company has). When investors see that there is a decrease in sales margin then they would be less interested in buying shares in a company, reducing demand for company shares. This then forces original shareholders wanting to share stocks to reduce their price so that people can be interested in buying their product. You can see it here. 

But, this all then changes when there is political instability. When there is political instability or a country has gone through a war, time and time again, there is always a follow up of a recession.  From my understanding, this is because companies and private individuals are trying to liquidate physical assets so that they can have money to compensate for loses or prepare for losses. If we look back at the great depression back in 2008 the 2 main causes where "the use of subprime lending" and "changes in banking culture leaning towards self-interest within the banking industry" says Bartleby Research. But, if we look more into how the banking culture changed, we see that the main downfall that the banks had was "another factor was that banks offered loans without looking into the financial stability of borrowers or businesses", this then meant that all business could take out ridiculous loans from banks that they couldn't afford to pay back. This then means that companies were laying off workers so then they could afford their payments. Which then results in people not having enough money to buy goods, then companies losing more money because they don't have customers meaning they have to lay off more staff, so on and so forth.

What is the EU Single Market?

"The European Union's single market is a trade agreement between all EU member states which allows free movement of goods, services, capital and people from one EU member country to another. This is why there is no limit on the number of EU migrants who can come to the UK or the number of Brits who can live in Spain, for example. The single market also eliminates tariffs or taxes on trade and has loads of rules and regulations on packaging, safety and standards that apply across the area. It encompasses the EU's 28 member states as well as the exceptions Iceland, Liechtenstein, Norway, and Switzerland." Taken from the Sun.

What does this mean for today?

As we know, the UK is going through Brexit. We currently have a deal that has been passed by parliament just a week or 2 ago (I can't seem to find the exact date online), part of this deal states that the UK will leave the single market. Read more info here. If the UK leaves the single market, it means that businesses trading in the EU will have a harder time transporting goods back and forth over the EU border, as well as that, it also means more costs which would lead to lower dividends and lower sales. This then, therefore, decreases shareholders wanting to continue to be part of a business which would then, in turn, mean large amounts of shares being sold with little demand. If we then capitalize this on this and buy into these shares for a really low price, we can hold onto these shares for 5-10 years when the market should by then have stabilized and been able to get a large ROI (return on investment).
For my American readers, as I'm not in the US I can't really speak for America. But open writing this I am aware that there will a new term coming up by November this year. So then, I would recommend waiting until then to buy a couple of shares on American Based Companies, because I anticipate that this political uncertainty could throw a couple of billionaires off allowing us to get a chance at more cash. As for the "war", I don't believe that it will go underway so unfortunately to my knowledge there isn't anything major that could allow you to make a lot of money. But be sure to follow my blog as if there is a chance I will update you on it! You can also read "how to reduce your monthly expenses". You can read my post on Why Rolex Marketing is so good

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