Financial decisions

Financial decisions

Financial decisions are, at times, complicated to make. For instance, while some investment decisions could lead to profits in just a few days, others could take longer times maybe even years. An area of interest to me is the bonds market.

Bonds are by far considered less attractive to investors when compared to the stock market instruments, and this is tied to several factors. The lack of price fluctuations on bonds is the leading factor coupled with their slowed maturing periods. Stocks have highly fluctuating prices and so at short notices. For instance, with occurrences of market changes such as a major industrial player selling their stock, the markets could crash almost immediately. The midnight tweet analogy is a common proposition which shows the effects of adverse communications in the stock market. Negative comments such as on industries or stakeholders in the market therein at most times have the propensity of causing rapid shifts.

Stocks are more associated with individuals who have a higher appetite for risk. Considering the money, stock, and bond markets are leveraged forms of speculator resolve, the stock market represents the most volatile segment of the markets in terms of sensitivity.

Bonds have fewer returns, but the returns are almost definite. Additionally, the Bond market slower and more stable thus, it is not easily affected by market information. However, it is worth mentioning that despite the stability of bonds, they are affected inversely by inflation. Investors are often wary of bonds ‘long term maturation period, especially when the inflation rates are rising. Therefore, bonds are the preferred instruments of investment only in times of projected long time deflation of the economy or its stability. Stocks value is hard to predict, but the latter is more volatile during market selloffs.