The overall financial health of the global economy, as well as the resources we have available to make intelligent projections, will greatly impact business success in 2019. Let's have a look at two of the major market trends to expect this year.
Continuing Stock Market Volatility
We enter 2019 with the financial sector in a bear market. (A bear market is an economy in which security prices drop 20 percent or more and stay low for a long time period.)
The 2018 market was volatile and the stock market is currently in the correction process. The most critical factors relating to stock market volatility are trade policy and interest rates.
“The trade war can expand suddenly into multiple industries and cause spillover effects," says Juan Carlos Arancibia, markets editor for Investors Business Daily.
Considering the financial uncertainty involved in current market trends, it's more important than ever that you have as much business intelligence as possible.
What does this mean for your business?
In the simplest terms, market trends indicate a sluggish economy—you should pay closer attention to your finances to avoid unnecessary losses. When it comes to investing, try to avoid having a knee-jerk reaction. If you can, stay focused on your long-term goals even if the pull to sell is strong.
On the customer spending side, if you are in the business of non-essential products and services, you can expect sales to decrease in a bear market. You may need to adjust your offering so that it's more in line with what customers need today.
Finally, it's a good idea to decrease your own expenses so that you don't need to borrow more money during this time. Due to rising interest rates, be very careful with new credit lines so that you don't get into an irreversible debt cycle.
Another of the critical market trends is trade policy. Keep an eye on new tariffs being issued by the U.S. government. A tariff is a tax on an import or export, and recently, we have seen new tariffs levied on goods coming from Canada, Mexico and the EU—not to mention China. These tariffs can increase costs, but you should balance how much of these costs you can safely pass on to your customers (i.e. through raised prices) without damaging your cash flow.
Data Decision-Making
Considering the financial uncertainty involved in current market trends, it's more important than ever that you have as much business intelligence as possible.
When data analytics first came on the scene, it mainly helped us discern why certain events or problems happened in the past. (Why did a certain product sell more poorly than another? Where did our best investments come from?)
But today, predictive analytics implementations allow us to use data to project into the future. Predictive analytics is the practice of extracting information from existing data sets in order to determine patterns and predict near-term outcomes and trends.
If you aren't already collecting relevant data about your customers or finances, make sure you have the means to do so. This is a good opportunity to examine the data you have, and decide whether it's providing value to your business.
For instance, it might be very useful to know if certain segments of your customer population are emailing complaints more than others. Data originating with your website's feedback mechanism can help you answer that question.
Every data stream you take the time to analyze should address a critical business issue such as production costs, operational spending, customer retention or employee productivity.
Last year we all saw how much trouble companies got into as a result of mishandling customer data. Don't make the same mistake. Use software or consult a data security expert to appropriately encrypt your data, follow the FTC's recommendation for protecting personal information and never sell your customers' information.
A major 2019 development is data analytics sophistication. Once you've identified your strategic data streams and have the most relevant information coming in, you'll want to select a tool that can provide you with the most robust reporting—easily distilling key insights from complex data to drive your financial decision-making.
In short, market trends indicate falling prices alongside increasing interest rates and trade tariffs. The good news is, there are data-driven decision making tools at your disposal to effectively predict what's coming and to determine the best financial strategy to cope with those developments.