As an American studying finance in London in the late ’00s, the dollar did not go very far. Today, however, with the ECB’s new stimulus plan, marks the beginning of a new era in the American currency: one of near parity with the Euro. With interest rates remaining near record lows, this bout of Euro Quantitive Easing will increase inflation and encourage Europeans to spend more. It will also allow me to stay in nicer hotels when I go to Spain this summer.
Coupled with Obama’s State of the Union this week, it’s clear that the economy is in better shape than it’s been since 2007, when people started fearing the oncoming recession. Now is a great time for small businesses to invest, since all points indicate that the American economy will lead the world in overall growth at least for a while.
Where the money is
Many investors are eschewing domestic stock pickers and moving their monies to lower-cost index funds. Where investors still rely on stock pickers is in foreign markets, where markets are less volatile. While markets are volatile at home, there is greater chance to earn more money at once, due to everyone’s desire to find that next Unicorn. More than 80 startups have been valued at over a billion dollars during this past year.
Bigger valuations, more dough
Most of these huge valuations come as a result of disruptive technology, especially within the sharing economy. Companies such as Uber and AirBnb are prime examples of huge valuations. When a lot of venture capitalists passed over Facebook they were made to look foolish after their enormous IPO and continuous success. While some older investors still remember the dot com bubble of 2000, younger people suggest that this time it’s different. But eventually, there will be a bear market, the only question is when. From my view, we have at least a couple of years, until the excitement from the next governmental change comes in mid-2017. That’s about two and a half years to cash in.