As of December 5, 2022 there were 173 IPOs on the US stock market, a whopping 82.3% decline compared to the same period in 2021, during which 980 companies made their public debut.
For any investor, portfolio diversification is key. For an Indian investor looking to invest in multinational corporations and cutting-edge technologies, US stocks are a great option.
The US market remains a target for Indians when investing abroad. You can own shares of FAANG stocks — Facebook, Amazon, Apple, Netflix and Google — as well as other major US corporations like Microsoft.
The market has had a blood bath this year. The S&P 500 is down 19% YTD and the tech-heavy Nasdaq 100 is down more than 30%. Analysts are divided on when they will recover due to continued concerns about high interest rates and recession.
Many companies failed to meet analysts’ expectations for quarterly earnings. However, that doesn’t seem to have rubbed off on investors. Alphabet, Tesla, Microsoft and Netflix have increased interest in buying from investors.
Because of a fixed fee involved in the remittance process, many investors prefer to make one-time transfers and then invest over time. However, those conscious of the depreciating rupee are making smaller remittances to offset the high price of the US dollar in these markets.
Information on Winvest’s investment app shows an 80% increase in investors buying shares, from roughly $10 million in 2021 to $18 million in 2022.
Indians go beyond investing in a single stock. ETFs gained popularity among Indian investors. SQQQ – An ETF shorting the NASDAQ100 is among the top 5 stocks
is traded on the platform, showing the savvy investor looking to protect his portfolio in falling markets.
Although investing in US stocks offers a great opportunity to diversify one’s investment portfolio, there are certain precautions that will help one make a safe investment.
Investors should closely monitor a number of indicators, including inflation, Fed Funds rates, Treasury yields, and dollar strength, among others, for signs that may restore optimistic sentiment in the markets.
Whether you’re investing in the US or elsewhere, don’t forget about asset allocation and diversification. Synthesizing your personalized investment position requires filtering the news, which means using asset allocation and diversification as effective tools to ensure your portfolio is aligned with your long-term goals.
Avoid trying everything at once. Chances of failure are high if you constantly change your style according to the latest trends. Stock timing and regularly changing investment strategies based on the latest craze can harm your financial stability.
Finally, beware of false information. Before making an investment decision, review everything carefully several times if any news seems particularly dramatic. Rely on reputable sources — don’t take financial players at their word.
The recovery of the world’s largest economy depends on a number of macroeconomic factors, including inflation and rising interest rates, and it is difficult to say whether the worst is behind US stock prices.
(Swastik Nigam is the founder and CEO of Winvest)