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Most people are actually out of cash most of the time. Especially after 2008, since the financial storm swept the world, “lack of liquidity” became a common expression in personal conversations, during business meetings and within white paper publications.
However, there will always be a certain number of people who never get out of cash and a smaller number of organisations who are indeed stuffed with it or even manage rich portfolios.
The option to borrow under certain conditions is available to both – to the ones with empty pockets and to the others with treasures. Borrowing is relatively easy in the UAE, as banks are rich and the interest rates are relatively low. There are some online credit brokers who offer loan application review in an hour of submitting it. Many stock market investors and day traders borrow to trade and depend on the difference between the lenders’ interest rates and the percentage they can earn by buying and selling shares bought with the credit.
Why is now a good time to invest in company’s stock?
UAE’s economy, along with the first and second global economies – China and the US, is on the recovery path. In terms of economic data, there is already a strong evidence in support of that statement. As economies recover, the opportunities to make money will become more, jobs will be more and more and consumers’ disposable income will grow.
Risk appetite among institutional investors is on the rise, suggesting fear of losing is somewhat forgotten and optimism prevails. Gold and other precious metals registered impressive gains during the past four years, but lately these commodities are trading in a range, which suggests that investors are not sure which way to go. On the other hand, stock markets across the world are advancing. This means that investors and traders see profit opportunities in the stock markets and get advantage on it.
One of the three rules for traders is: “Follow the Big money!” Following the big money doesn’t disappoint most of the time, but you have to be quick to hop on the train fast and jump out before it crushes. What means that? Big money managers have access to information before the market data riches the evening TV news. They are ahead of the news-flow and market analyses and experienced traders are able to recognize their moves. The “big money” are usually managed by teams of highly qualified, superbly equipped professionals, who do not gamble and take unjustified risks, because their lucrative salaries and fat bonuses are at stake along giant’s portfolios. If big money managers now place assets in equities, it means that they expect good returns.
Although in 2012 and so far in the beginning of the new year UAE stocks advanced, the gains are still minor in terms of valuations from the boom years. Both Dubai and Abu Dhabi’s financial markets indexes are still over 50% lower than their peak levels. This suggests that the room to grow is significant for long term positions, while for retail traders, the opportunities for quick gains will be open for a longer period of time.