During what would be considered a normal era, commodities trading would be a viable investment strategy. Experts like Nicholas Kyriacopoulos will point out that not all types of investments are suitable for pursuit during the COVID-19 pandemic. In fact, a commodity is a type of investment that you may want to avoid until the pandemic has passed. Why? Here are some reasons to consider.
Change in Demand
Data from multiple analysts provide information about the performance of commodities throughout 2023. The bottom line is that most types decreased in value during the year, with gold being the only significant exception. Commodities like agricultural products were somewhat mixed but still underperformed. Oil was among the biggest drops, possibly due to the fact people across the world were suddenly working from home rather than commuting.
As Nicholas Kyriacopoulos and other investors know, moving through and ultimately past the pandemic will be a process rather than an event. It will take time for the demand related to certain commodities to regain their former levels. Do monitor the progress so you know when to jump back into this part of the market. Until then, focus your attention on other investment opportunities.
Commodities Trading is Especially Volatile Right Now
Trading in commodities has always been somewhat volatile, but it’s become more of a risk during the pandemic. It’s not just the decrease in demand. It’s also speculation about which commodities will recover and when that will happen. Some experts believe that the pandemic’s impact on the commodities market will continue for some time after the crisis is truly finished.
Here is where a piece of advice that Nicholas Kyriacopoulos and other successful investors have given in times past still applies: diversify the portfolio. Whatever you’ve been allocating to commodities in the past, redirect it to other investment types. There are still quite a few that are performing well. Seek those out and plan on holding them for a year or two.
And The Returns Are Not That Great During the Pandemic
You might decide to devote a small percentage of your portfolio to commodities for the remainder of the pandemic. If so, make sure you know which commodities are at least holding their value and which ones to stay away from completely. It’s a long shot, but you might generate some returns.
Even so, don’t expect those returns to be in line with what you experienced prior to COVID-19. For now, any returns you do manage to garner will be less than in the past. Overall, you would likely do well to go with some other investment type that is providing a relatively steady return while carrying less volatility. As Nicholas Kyriacopoulos would point out, you can always revisit the issue as the pandemic wanes and see what you think.
Other Investment Opportunities Show More Promise Right Now
Investors like Nicholas Kyriacopoulos have not stopped investing during the pandemic, but they have redirected their sights to other options. You would do well to follow that lead. There are companies that issue stock that is doing very well right now. That’s especially true for companies that are offering services suitable for getting things done even if there’s a lockdown in progress.
Consider where you would be right now if you held investments in tech, particularly tech that has to do with web/video conferencing. The demand for online conferencing solutions has exploded, with everyone from small business owners to corporations to non-profits using this medium to keep their operations going. There’s still time to get in on investments like this since at least some of the current users will be utilizing these services for some time to come.
Bonus: Types of Commodities People Trade
Before the pandemic occurred, people were investing in commodities regularly. Of course, all these individuals or groups of investors were experienced and skilled. As mentioned in the part above, the price-changes of commodities have never been too predictive and they were experiencing ups and downs too often.
Something worth mentioning is that all commodities that people are trading with are divided into three different categories. The first category is metals and they were probably the most attractive ones for many investors. This category includes metal commodities such as copper, gold, silver, and platinum. Investors had the chance to invest in precious metals as a hedge against periods of high inflations while others would do that because they seemed reliable.
Another category is energy. All the alternative sources of energy such as solar energy, wind energy, biofuels, and others are covered in this category. Logically, many people invested here because we are all waiting for the moment when all these alternatives will become way more popular.
Last but not least category is agriculture. As you can probably guess, this category includes coffee, cotton, sugar, corn, soybeans, and others. The prices of these products can especially be volatile during the summer. Despite that, the price changes directly depend on the weather changes, and you probably understand why.
All these categories seem interesting for investing. However, as previously mentioned, there is no reason to invest your money in a hurry. Before everything, you need to improve your knowledge of the global market and the price changes of all commodities. Despite that, it would probably be much better to wait to see how things are going to change in the future. Pandemic has messed up the plans of many entrepreneurs and workers. We all hope the current situation will change soon.
Insulating Your Portfolio From Losses
Protecting your portfolio is partly about choosing investments that generate reasonable returns. It’s also about knowing what investments to stay away from until they demonstrate some degree of recovery. By diversifying your holdings and avoiding commodities right now, you stand a better chance of not losing money during the pandemic.
This will ensure that you’re in a good position to focus more on increasing the worth of your portfolio once the pandemic has passed. Instead of seeking to make up for losses, you can concentrate more on increasing your worth. That’s a good place to be.
Like Nicholas Kyriacopoulos, you too can navigate through the pandemic and keep your financial security intact. Choose investments wisely, stay away from commodities for right now, and explore some options you never thought about in the past. While there are no guarantees, seeking to find the right balance is highly likely to pay off.