It is a new day of freedom in the Arab World. Egypt has overthrown its dictator, and as that has played out, oil prices have fallen. The big question for investors is whether a move towards revolution and democracy in the Arab world will mean greater investment opportunities in the the West. A wise position will be to be careful with international markets. Today, all markets are up, with the exception of Japan. Tomorrow could be a whole other story.
Bolstered by the success of the Egyptian uprising, it’s entirely possible that revolt in other oppressive countries will cause Western business holdings to suffer. In Egypt, the workers began to strike. If that were to happen in third world countries where international companies rely on cheap labor, profit margins would start to shrink pretty fast. Certainly, we live in a world economy, so international trading will probably always be a shaky bet. The key to good stock investing will be to diversify throughout the globe and at home.
Oil is a funny thing. If oil prices fall, will other commodities be easier to come by at a fair price? If that happens, will retail markets improve? Investors are always riding that wave, trying to figure out when to buy and when to sell. On February 11, all international trading funds were glued to the happenings in Egypt. It would make a big difference on Monday morning when the markets opened back up. Western profits are deeply reliant on the oil and gas commodities that the Middle East holds. Any unrest in the region will affect consumer prices and the overall performance of the international market.
Often the best international trading takes place in the high tech markets. Technology development is much cheaper to produce in foreign countries. The intelligence is there, and it comes at a better price. That doesn’t do much for the American job market, but it means everything to a stock driven company’s bottom line.