How can Investing Books Help in the Face of Market Uncertainty?

Right now, it wouldn’t take a leading market researcher to conclude that we are living through uncertain times. This captures events inside and outside the financial world. 

Of course, the problems that countries are facing in light of the pandemic are severe. But it’s the impact on the financial markets which is probably having the broadest impact on everyone’s global standard of living at the moment. For example: 

  1. Falls in stock market indices such as the Dow 30 or the Nasdaq in March 2020 meant that the value of pensions, stock market portfolios and other investments fell sharply. Such falls will impact the financial confidence of consumers to venture out and make large purchases which are part of an ordinary and functioning economy. 
  2. A negative change in attitude can cause many investments to become illiquid. For example, peer-to-peer lending platforms have seen very large rates of withdrawal, which is impacting their ability to return funds to investors over previously advised timescales. Even investors in ‘quick access’ accounts have found they have needed to wait for 4-5 months to receive their cash back. To be clear – peer to peer lending has not necessarily become a bad investment. All that has happened is the appetite of investors to take those medium risks has waned, leading to a ‘run on the system’, causing immediate liquidity issues, which could become broader solvency issues. 
  3. The lack of business confidence has led to a wave of redundancies announced for high street and industrial organisations. Several of these announcements had been ‘on the wall’ for some time, i.e. the business was struggling to remain viable even before the recent lockdown turmoil. This wave of genuine joblessness, combined with the ‘temporary joblessness’ of employees on furlough schemes, have reduced the aggregate spending of consumers.


How can investing books help with uncertainty?

This presents investors with challenges from multiple angles:

  • Forward looking returns appear to be low
  • Liquidity of investment platforms is now higher-risk
  • Investors may need to set aside more cash for emergencies (such as if they are made redundant or need to take a pay cut to remain in work)

Investing books can provide good information on all of these aspects of investing. 

If you initially begin reading the best investing books for beginners, such as reference guides, you’ll ground yourself in the basics of investing. Choosing the right investment platform and medium, determining an asset allocation, and how to drip feed money into the market over time. 


Low returns

Investing books can help you understand more about high-return asset classes, such as property development, land speculation, arbitrage and hedge fund strategies. 

These may provide your portfolio with a long-term boost to investment returns, which could be very helpful when interest rates continue to dawdle at rates approaching 0%


Liquidity issues

Reference books and beginners guides to investing will explain how investors should construct a portfolio using asset allocations that ensure that liquidity will be sufficient even during difficult periods. Examples of actions taken will include increasing the allocation to cash, government bonds and corporate bonds. These are liquid investments, and tend not to be as volatile during dramatic ups and downs in the financial markets.

Overall, investing books can offer a great deal to an investor during uncertain periods. A good knowledge of the basic elements of investing principles is actually all you need to produce an investment position that will be better placed to weather a storm, and which will remain in line with your investment objectives.