Which assets are worth investing in October 2022 — review by DotBig
Finding investment opportunities is a responsible and complicated task. If you start searching for how to start investing, you will see that the choice of an asset might depend on many aspects of your strategy for investing. It’s determined by the risks you are ready to take, your capital, goals, deadlines, etc.
In this review, DotBig analysts displayed 5 of the best investment options in October 2022. However, before we get down to them, let’s consider why your asset choice must be a well-thought-out decision.
Why are many asset prices down today?
The world’s economy goes through difficult times in 2022. Today, we see that prices on many demanded assets are down. The first reason why this is happening is the increasing interest rates. This causes a decline in stock prices, and as a result, these assets are below what they would normally be worth.
Increasing interest rates lead to the rise of capital costs, which negatively impacts the company’s earnings. This happens because businesses are forced to pay much higher interest expenses, and they cannot gain the expected net income. This is what makes their asset prices decline.
The expected recession is also quite a significant factor to take into consideration when looking for assets to invest in. The recession causes a decline in employment, which directly affects the earnings of businesses and their stock prices. The decline in employment is often caused by falling demand due to high inflation. In 2022, the inflation rate is expected to reach 7.5–8.3%. Seeing the declining prices caused by the recession, investors pull their funds out of the markets and make these assets even less worthy.
Inflation isn’t the only reason for this year’s recession. It’s also caused by the Russian invasion of Ukraine, which provoked an immediate response from the USA and EU. They imposed sanctions and stopped importing and exporting many products, which made them more expensive due to growing demand and falling supplies.
Even during such difficult times, there are some promising and safe assets to invest in as of October 2022. Let’s take a look at the prospect of investing in:
Gold has always been considered a good investment instrument against rising inflation and interest rates. Over the passing 6 months, gold prices have dropped more than 3%. As of September 29, gold is valued at around $1,649. Considering this, can we say we answer the question: is gold worth investing in 2022? We believe that this price is quite a good entry point for investors who want to hedge against risks.
Investing in gold 2022 is a reliable way during a recession time because gold is priced differently than other assets. Gold prices are reactive, while quotes might be determined by prices of other commodities. After the recent fall in price, gold is expected to show positive performance and reach at least $1,750.
What do algorithms say? Is investing in gold a good idea in 2022? Algorithms predict the rise of gold prices as well. The forecasts of algorithm-based websites aren’t much different from the short-term perspective. They expect that by the end of 2022, the gold price might reach around $1,720. Some predict that the 2023 rise will exceed $1,000, meaning the prices will stop at the mark of around $2,900 at the end of the year. Our forecast isn’t too optimistic, we expect this point to be reached by December 2025.
Maybe the expected rise of gold will not bring such gains as other assets would bring in the same terms. But during a recession time, it’s important to find reliable products. In any case, small gains are better than any losses.
We all know that successful investments in cryptocurrencies might bring millions of dollars of gains. Nevertheless, even if you know how to invest in cryptocurrency, you might face failure and lose all your money, since these assets are extremely volatile.
Despite the volatility of the crypto market, we consider digital currency a good investment in October 2022 because they are decentralized and independent of the above-mentioned factors. You might consider Bitcoin the most popular cryptocurrency to invest in. The reason for this is the reliability of this project and its capacity to achieve long-term goals. Plus, after the recent crash of the crypto market, Bitcoin has suffered a severe decline, and now it’s valued at around $19,454.
Bitcoin isn’t the only digital asset. The competition between different blockchain projects is so tough that it might be difficult to determine the best cryptocurrency to invest in 2022. We recommend considering the following crypto investment options:
- Ethereum (ETH)
- Tether (USDT)
- Binance Coin (BNB)
- XRP (XRP)
- Terra (LUNA)
- Cardano (ADA)
- Solana (SOL)
Whatever cryptocurrency you choose, it’s a good instrument to diversify your investment portfolio. Plus, it might bring quite a considerable gain in the future, since many industries are shifting to blockchain technologies today. It makes sense to diversify your portfolio with cryptocurrency in 2022, but make sure that you chose not just a mainstream blockchain product, but a reliable project that will perform relatively stably in the long run. Make your own research to find such an asset.
Unlike gold and cryptocurrencies, stocks are heavily affected by economic events. This is because their prices depend on the income of companies and their performance. Consequently, it’s difficult to be productive for business during hard times.
Nevertheless, there are sectors that will be demanded despite inflation, recession, or supply chain disruption. Stocks of such companies are considered recession-proof. If you want to add some stocks to your portfolio in October 2022, you should know how to invest in stocks from recession-resistant industries.
The first sector you should consider is healthcare. Despite the prices, consumers cannot ignore the necessity to spend money on medicine. The demand for it will never decrease even during the most severe crisis.
Assets of companies that are focused on staples food production are also considered quite good stocks to invest in 2022. If people won’t go to restaurants, so they will prepare food at home. Consequently, they will need to go to grocery stores. Also, stable demand is very common for household and personal products.
Last but to least, during the recession, you should consider investing in the stocks of utility companies. Despite rising bills, people won’t stop using electricity, water, and gas. That is the reason why utility companies can perform quite good earnings even during the most difficult times.
Considering the above-mentioned peculiarities of the stock market during the recession, we would like to recommend you the best stock to invest in 2022:
- Johnson & Johnson (JNJ)
- PepsiCo (PEP)
- Procter & Gamble (PG)
- NextEra Energy (NEE)
- Pfizer (PFE)
If you want to minimize risks and maximize potential returns, you should invest in indices. These products are considered quite beneficial not only during recession times but in normal market conditions as well. Indices are much better than other types of funds, and this statement is driven by particular reasons.
First of all, index funds are well-diversified and they add good diversification to your portfolio. Diversification is one of the most common ways to minimize investment losses. Let’s take a look at the S&P 500 index, for instance. This asset includes 500 various stocks. So even if one shows poor performance, its negative impact on potential returns is mitigated by positive fluctuations of other stocks, included in this index fund.
Plus, investing in indices is a low-cost affair. Other types of investment funds usually provide much higher taxes and management fees, which forces you to make additional expenditures.
Last but not least, indices offer better returns than other assets in the stock market. Warren Buffett definitely knows how to invest in indices because in 2007 he invested $1 million, expecting that the S&P 500 index will outperform other funds over 10 years. This bet was successful because the statistics say that no more than 25% of mutual funds can outperform S&P 500 over 5 years.
One of the ways to resist the recession is to invest in oil and gas. The quotes on these commodities are constantly rising because of the increasing demand and shortage of supply sources. Gas will always be demanded because this energy source is cheaper and more than other fossil fuels used for heating. Plus, the infrastructure of the majority of industries is heavily dependent on these commodities, since switching to renewable sources of energy is quite a durable process.
If you don’t know how to invest in oil as a commodity, you might consider discovering oil companies to invest in. The prices of their products and services are rising together with oil prices. Consequently, these companies don’t suffer a shortage of earnings even during the most severe recession. They generate significant capital gains and their stocks are becoming more attractive to investors. This provides them with a bigger capacity to increase oil production and increase their earnings again and again.
Here we have some good examples of oil stocks to invest in as of October 2022:
- ExxonMobil (XOM)
- Royal Dutch Shell (SHEL)
- Chevron (CVX)
- TotalEnergies (TTE)
- ConocoPhillips (COP)
- Kinder Morgan (KMI)
- Phillips 66 (PSX)
- Schlumberger (SLB)
- Whiting Petroleum (WLL)
- Chesapeake Energy (CHK)
Finding investment opportunities during harsh times is challenging. Nevertheless, there are always some promising options to take into consideration. We hope that this review from DotBig analysts will help you find your way during the investment period in October 2022. Invest in the most prospective and recession-proof assets with the help of the best tools available on the DotBig trading platform. Stay with us for more investment insights!