A host of financial advisors and strategists have recently changed their advice for investors. Moving away from high growth vehicles, many now see dividend-paying stocks as the best bet over other investments like Bitcoin. Bank of America, UBS, Goldman, and others have all shifted focus.
Not known for dramatic price appreciation, dividend stocks are often considered a bit blasé with the market of the last year. However, the potential for unrest in the Middle East, and a looming election could drive investors this way.
The stock market has experienced dramatic shifts over the past few weeks. News of the conflict in Iran drove prices down sharply, but the week saw a momentary touch above $29,000.
From market collapse to all-time highs reveals the volatility danger facing investors. Additionally, with the US economy needing to weather another presidential election, investors are anxious.
Dividend stocks—stocks that offer payouts to stockholders—have a form of guaranteed return. Assuming stock prices remain relatively stable, investors can count on returns, albeit small.
The past several years have seen an unparalleled bull run for equities markets. However, this market pressure has begun to reverse, with strategists advising safe, rather than growth markets.
Bitcoin and Volatility
The week also saw remarkable volatility for Bitcoin. Prices made a near-10% swing upward, only to lose nearly all those gains. The price has now settled somewhere just north of $8,000.
This type of investor skittishness may well send Bitcoin down, should the trend continue. As investors see the potential for loss based on news events, the price of Bitcoin could suffer.
However, the potential for the halving event to bring a bull market is also strong. The market appears to have shown stability before the event. Many analysts believe this is ‘pricing in’ for the potential jump. Others, though, believe that the price of Bitcoin will respond to the anti-inflationary measures.