What investments should you buy when a market is booming?

December 6, 2018

It goes without saying, the ideal time to buy investments is when they’re at a low point, and selling them when they’ve increased in value.

Some investors do this by watching a country’s economic cycle.

If you’re clever, you can identify the stage of the economic cycle you’re in, and purchase your shares in the economic cycle that they’re most likely to be lower in value.

Here is an explanation of what a market boom is, and which industries to consider (or avoid) buying investments in.

A boom occurs when real national output is rising at a rate faster than the trend rate of growth. Some of the characteristics of a boom include:

Some key indicators of a boom are:

  • a fast growth of consumption helped by rising real incomes, strong confidence and a surge in house prices and share prices
  • a pick-up in demand for capital goods as businesses invest in extra capacity to meet strong demand and to make higher profits, and / or
  • ‍more jobs created and falling unemployment and higher real wages.

What's the best industries to invest in during this time?

People become more confident when it's more easy to get jobs, are getting bonuses and pay rises. They spend more and are willing to take more risks on products and services they may not otherwise consider.

​Information technology has been the best performer of all the sectors during this phase, having certain industries—such as software and hardware—that typically pick up momentum once companies gain more confidence in the stability of an economic recovery and are more willing to make capital expenditures.

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