The Olympic Games and the Financial Markets
The Olympic Games as a game changer
There’s a lot of excitement in the air over the Olympic Games. Often, it’s easy for investors to fall prey to thinking that markets will be bullish. Many people, swept by the frenzy caused by gurus and other authorities, think they are safe with any investment. But how true is that?
Investors are always looking for opportunities, no matter the context. It’s basic human nature. While we can say for sure that the Olympic Games in general improves its host country’s economy and bring up many new opportunities, one needs to be cautious as there are still many unknown variables to account for. So, what to expect from this year’s Olympic Games in Brazil?
For that, Tradeo has elaborated this brief analysis on a few points to consider when investing during the Olympic Games.
The power of the games
During previous Olympic Games, the Financial Markets have almost always registered an increase in value. With the exception of a few years in which there was actually a slump (like during WWII), most of the times, the world’s most famous sporting event has brought increase in asset values.
This has been particularly true for the hosting country due to the inflow of eager-to-spend tourists. This means that hotel, restaurant and car rental chains, building companies and state owned companies, as a whole tend to go up. The amount of taxes collected during these 2 weeks can exceed any other national events and the State is always the one benefiting more from the Olympic Games.
As tourists spend, all associated companies and organizations stand to profit. But perhaps the greatest gain lies specifically in the Forex market, as the hosting country’s (Brazil) currency tends to soar.
It’s important to keep in mind that, when there’s big potential for gain, there will always be individuals who will try to manipulate the markets for their own advantage. The Olympic Games is no different. Companies tied to the government can easily be winning concessions, auctions, exclusive rights and other privileges to build or reform stadiums. Yet, for good or bad, the potential for gain is incalculable.
What to expect for the Olympic Games
In summary (and, as always), while there are plenty of opportunities for gain during the Olympic Games, one should remain cautions and detached from emotions. It’s a time of high volatility for associated products, and carelessness can cost dearly. Therefore Tradeo suggest traders invest where they feel safe, without being compelled by rumors, gurus or even breaking news. Play safe and don’t let the euphoria get the best out of you.