New enthusiasm to face the new year is one of the wishes that small and medium-sized people expect to receive 2019, although it will depend on many factors. At the end of the day they will be the ones that determine the direction that the equity markets will take in this year, since nothing simple is expected to generate profits in the investment portfolio. Not in vain, it will be full of obstacles after a 2018 that has not been satisfactory at all for your personal interests. Where the safety of operations must prevail over other technical considerations.
The year that has gone us has left a depreciation of the main international stock indices with margins of van from 5% to 15%. In other words, investing the savings in 2018 has not been profitable. After the financial markets have developed an upward trend for almost seven years, specifically after the economic crisis. Well, this year that we have left has been a turning point in the rises in the stock market. Now it remains to be seen whether it will just have been a halt on the road or the beginning of a recessionary phase for equity markets.
From this general scenario, there will be no choice but to act with caution when making contact with the stock markets. Of course, do not expect, in the best of cases, large revaluations in the price of shares. Not much less, but it will take some luck to meet the objectives and that will be given by a series of factors that we will try to explain from now on. Are from diverse nature and in any case, small and medium investors will have to be very vigilant in the coming months to enter or exit the equity markets.
Factors: rate hike
At last, the moment that nobody wanted seems to have arrived when the monetary organs of the euro zone are going to decide on a gradual rise in the price of money. At the moment the price of money is worth nothing as it is at 0%, but if everything proceeds as stipulated in the script, it may be that at the end of this exercise it will be established in a range between 0,25% and 0,75% . It is not much, but it is still a measure that is not liked in the equity markets and therefore it can cause sales to prevail over purchases for the next twelve months.
This kind of news is not well received by investors and in this case it will not be an exception either. Everything will depend on the intensity that is provided to these increases in the price of money. Because initially the markets have already discounted these rises in the value of money. Any disproportionate rise will mean sharp falls in the stock markets and a wide cut in the price of publicly traded companies. Beyond other technical considerations and in some cases also from a fundamental point of view.
Tensions in the euro zone
Another problem that this new year that we have just started can bring is that derived from the tensions in some of the members of the European Union. We will have to be very vigilant in the coming months because any negative news will have a very pernicious effect on the savings deposited in the equity markets. Furthermore, it cannot be forgotten that some supports of special relevance in the main stock market indices have been broken. In other words, the markets have already given enough signs of weakness to consider this to be a good year to enter the stock market.
On the other hand, it will be a year of important general elections in some of the most important countries of the EU and they can bring very negative surprises that investors do not expect. In this sense, caution should prevail over other considerations. A good strategy for trading on the stock market this complex year is to direct the movements to shorter deadlines. Never to intermediate or long periods of permanence since the risks are more than palpable in the face of the uncertainties presented by the financial markets.
Increase in the price of oil
Another aspect that can weigh down the evolution of international stock markets is the escalation that the oil market has been having in recent months. This important factor is not good for the equity markets and in this sense it can play a very relevant role so that the depreciations in the stock market continue also during this incipient year. Financial analysts consider that a price in oil above $ 85 the barrel will nullify any attempt to recover the publicly traded securities.
The outlook at the moment is not very promising for small and medium investors. Where market sentiment is bullish for a financial asset such as black gold. Suffice it to remember that just a couple of years ago the price of oil was in a range that was moving between 30 and 40 dollars a barrel and this made it easier for shares on the stock market to rise, in some cases with great intensity. In this case, the situation can change significantly to the point of affirming that oil may be the worst allies of the international stock markets.
Downward revisions of companies
There is no doubt that there is a further slowdown in profits for publicly traded companies. And this important factor may lead to an adjustment in the price of the shares with respect to the levels that have been presented at the end of 2018. Therefore, we will have to be very attentive to how the business results will be in the next quarters. Because there may be some other negative surprise that can make you lose a lot of money in your operations on the stock market. With sectors that seem to have already reached the best of their levels when it comes to their prices.
On the other hand, you cannot forget from now on that the profit warning it may be much more numerous than up to now. In fact, in 2018 there have been some warnings that have knocked down the valuation of some listed companies. From this point of view, this factor can play you a bad trick if you are invested in your financial assets. You will have no choice but to direct your operations towards the safest stock market sectors that have protection in their business accounts. Not surprisingly, it is your own money that is at stake in this new stock market exercise.
New recessive period
Nor can it be ruled out that the stock markets all over the world enter a bearish process of a certain intensity and that they can cause you to lose a lot of money if you have opened positions in some values. In this sense, it cannot be forgotten that equities have been going up many years, excessive to the understanding of some of the most relevant financial analysts. This is one of the reasons that would explain a correction of some intensity in the financial markets.
Faced with this scenario, the best investment strategy is to be in complete liquidity. In addition, it will help you take advantage of the business opportunities that arise in the next few days on the stock market. Because without a doubt they will appear and in this sense you must be prepared and the best training is to be out of the markets at this time before what may happen. On the other hand, you have other financial products based on fixed income that offer you a fixed and guaranteed return every year. Of course, it is not very high, but they will help you make your savings profitable, and of course, further away from the most aggressive investment approaches.
Fear of a recession
Another of the catalysts for the bearish movements in the stock markets is the fear of investors that there may be a new economic recession. This factor is causing sales to be imposed in the equity markets as many investors are turning to fixed income as a strategy to protect their interests regarding the management of their capital. From this very particular point of view, your most immediate objective should be that this event does not catch you off guard, as happened with the economic crisis of 2007 and 2008, where many of them were trapped in their positions.
Not surprisingly, there is also the factor that we are talking about a certain overheating of the equity markets. Where their strong hands have already begun to undo positions and direct their investment strategy towards other alternative models. Perhaps you can imitate these actions to improve the balance of your savings account when the new one that has just started ends.