How Financial Demographics Have Changed Since March 2018

Demographics could be the destiny shaper of economic growth and success of financial markets. However, this will not happen if the western economics are not ready to solve the underlying social and environmental challenges. Population growth in western countries as compared to Asian, Middle Eastern and African regions is very low, and this affects growth of private capital.

Financial markets need stability of private investors so that they can provide the government and philanthropists with supplementary support. Financial markets used to be dominated by elderly people, but today young investors are joining financial markets as early as they hit 20 years. Apart from age, there are other demographic factors that are shaping financial markets today.

Age

Traditionally, it could have been very hard for you as a potential investor to risk with the financial market if you are under 40 years of age. The reason why this was the case is that people were expected to work for several decades before they can get a promotion and earn enough income for such an investment. Things have changed a lot today, and numerous young entrepreneurs have succeeded in their twenties and therefore can afford to become investors like any other person.

There are several factors that help new businesses to prosper faster today than some decades ago. Apart from the young entrepreneurs, the older adults over the age of 70 who could have been considered ineligible to invest in the financial market are also successful investors in such investments. Despite that age used to be an important consideration when it comes to financial markets, today, it cannot be used as a limitation to do the same.

Globalization

Globalization is one of the factors that is playing a big role in the growth of the economy and different investments. Globalization is helping people to move from one state to another easily and also trade in these nation without many limitations. Previously, it was very hard for a business to expand its operations in other countries due to numerous conflicts and lack of relevant technology. However today all this has been changed by globalization and the tremendous advancement of technology among other inventions.

For instance, communication has been made so easy allowing people to continue monitoring their business even when they are away. This means that for a person to invest in financial markets in another country or when away from home, they will easily do so through a few simple clicks. Globalization is opening ways for potential investors to invest in financial markets all over the world. Previously many limitations used to deter them from doing so.

Vulnerable Groups

A few decades ago, there are groups of people who were considered ineligible to do certain things or carry out certain businesses. For instance, some careers were only considered fit for men only and women could not join such industries. People were also limited to get chances at work because of their race, religion or gender among other demographic factors. However today sexism is not something considered in the business industry as a limitation because men and women have ventured in industries that were previously dominated by women and men respectively.

People have decided to break the ceiling with an open mind so as to create more opportunities for everyone. This means that no one is limited to venture into financial markets because of their race, gender, ethnicity, religion or any other demographic. Every person is qualified as long as they have the necessary know-how and capital required to invest in financial markets.

Education

Traditionally, people had limited chances to get academic qualifications unlike it is today where People tend to obtain more college degrees and other credentials. Education has always been linked to success at work, entrepreneurship and investments because educated people have been taught more on taxation, financial statistics and technical calculations among other things. The advanced information acquired by today’s millennials will shape the financial markets because they have more know-how than older generations. This will lead to a modernized way of handling operations in the financial markets and most probably make things more efficient.

Things seem to change by day due to numerous evolvements in the world. This include changes in how people view others, growth in technology, globalization and modernization. Today, people’s demographics do not limit their success in different aspects of life because a lot has changed within the last few decades. It means that changes in demographics’ perception are reshaping financial markets and other investments.

How The 900 Point Drop In The Stock Market Will Affect Businesses

This past Thursday, the stock market officially dropped 900 points which makes the month of October the markets biggest loss since February. The numbers reported are enough to make any investor pull out. While the stocks took a sudden plunge, panic also set in for not only the investors watching but for the business. This comes unexpectedly as the blue-chip stock hit an all-time high. Technology stocks took the majority of the damage in this decline. Here are the ways that this 900-point drop will affect businesses.

Financial health is affected

When investors are looking at a business, many observe the price. When a stock price is firm, this is an indicator of the business’s financial health. A business is determined to be financially feasible by analysts to inform investors by evaluating the financial data and stock price of the business. The stock price is an indicator for determining if the business’s potentials are content or concerned. With the plunge, several businesses are at risk of not being able to raise capital because potential investors are being told by analysts or brokers that this business may not be in their best financial interest. If the stock for the business continues to fall, they could lose their current investors to, which in turn is critical to their financial health and data reports.

The looming risk of a takeover

A takeover of a business is high when the stock price falls. This is a risk because now the business’s stock price is cheaper. This negatively affects businesses because they are not making capital once the takeover is complete. To understand, the public companies can distribute their shares among thousands of shareholders who have the ability to sell whenever they choose. When organizing a takeover, the bidders have a higher percentage of being able to offer a better price to shareholders solely because the trading price is lower.

This is another reason how this 900-point drop will affect businesses. If their prices are on the cheap side and bidders can and will perform a takeover. The problem with this is that the interests that are being protected by management no longer will be because management for the company will be released. This does not apply to just bidders; another business can be keeping an eye on a declining stock price of another business to perform a takeover. The business acquiring the other is able to avoid taking a debt because they have the finances to back the acquisition.

Spending halts

As an investor, people tend to continuously spend more when their stock of the business they are investing in is on the rise. This indicates that the business is in good financial standing and so is their money. The equity markets improves in wealth when people invest in them for the business as the stocks are increasing. The formula is usually increased wealth = increased spending because outside of the stock market, investors, who are most likely consumers of the business, are actively buying the goods or services. The spending increases revenue for the businesses.

The opposite occurs when numbers drop. So, this 900-point drop has affected the equity market, the revenue, the stock price, and the spending habits of the consumers. When a consumer reviews their portfolio and sees a rapid drop in value they are not going to continue their spending habit. As stated above, an increase in spending means an increase in business revenue, but a decrease in spending means the same for the revenue. This is especially true for businesses who sell non-necessity goods and services, such as high-end vehicles or entertainment, which will cause the consumers the willingly relinquish the items if they are suddenly confined to a smaller budget.

Tech companies will be affected by the drop

Tech companies such as Caterpillar, who took the lead in the recent stock market point decline according to the Dow Jones Industrial Average. The shares of such companies as Facebook, Apple, Amazon, and Netflix have been affected also. Unfortunately, Facebook, Twitter, and Alphabet, a Google-parent company, are receiving extreme governing scrutiny from the U.S. government because of the trade fight that is affecting the supply chain from China. This is due to Trump’s stern stance on Beijing. Chris Zaccarelli, who is Independent Advisor Alliance’s CIO (chief investment officer) mentioned that because of the trade war with China, tech businesses will be affected the most and need to be concerned about the rising interest rates.

Experts are chiming in and saying that this point down is a correction and not the beginning of a crash. Businesses are being informed to not panic, and do not time the market.