So that what happened to you in the last year does not happen again, we are going to give you some behavioral guidelines so that you know what you have to do when your investment portfolio in the stock market is in a negative situation. In 2018, the selective index of Spanish equities, the Ibex 35, was slightly more than 15%, with values that collapsed above 30%, such as those from the banking sector. This is something that you cannot allow this new stock market course.
The biggest problem with losing money in the equity markets is that things can get worse. This is something that investors with more experience in financial markets are well aware of. Because they are always liable to make your situation worse. Also, you can not forget that a downtrend leads to a very significant depreciation in the valuation of the shares. And you will have no choice but to cut this scenario so detrimental to your personal interests.
On the other hand, we cannot forget some predictions that indicate that a economic recession at a global level that can have a very negative impact on international equity markets. In this sense, a New York Times survey reveals that more than half of the CEOs interviewed assume that there will be a recession by the end of 2019. It is clear that for months some have warned about a possible recession, but most experts do not expected to occur until the second half of 2019 or 2020.
Losses on the stock market: sales
One of the first strategies that can materialize in stock market operations is to execute sell orders. It is a very effective system if it is carried out in advance, that is to say when the equity markets have started to decline. It is much better to catch it in time than to wait for the handicaps intensify as days go by. You do not have to worry about losing a minimum monetary amount, but what is more worrying is that you leave very important amounts along the way in these investments.
Applying this strategy in investment is easier in the short terms of permanence since what you are looking for are quick operations, in one sense or another. Another very different thing is in the medium and long terms where it is much more complex to stop these losses. Beyond other technical considerations. You can even use a tool as powerful and effective as the stop loss orders. Not surprisingly, they will help you reduce them to the levels that your domestic economy can support at each moment.
Take advantage of rallies to sell
In any case, if you are totally determined to sell your positions on the stock market, the best strategy you can take from now on is to wait for them to occur. strong rebounds in the quote. In this way, there is no doubt that you will be able to minimize losses and at least the sales will be so detrimental to your personal interests. This is one of the great advantages that the appearance of the well-known rebounds in the stock market bring you. They are not used to make purchases, but rather the opposite, to gradually undo positions and depending on the trading strategy you are using at that time.
On the other hand, to sell in these movements, which are the rebounds, you must formalize it at the top of the price configuration. That is, you must speed up the rise that occurs at those times. Because a rebound can last a very few hours or end up being perpetuated for several weeks. Of course, it is the most complicated phase of this process. Know what is the most opportune time to sell your positions in the equity markets. It is not advisable for you to overdo the braking since the effects can be the opposite and this is something that can seriously harm you.
It is also highly recommended that you do not get carried away by impulses and have time to analyze what is best for you on each occasion. Decisions that are premature are not good business for small and medium investors. Surely it is something that you have verified in the operations that you have carried out in recent years. It is an experience that you can benefit from from now on. Because you cannot forget that a lot of money is at stake and it is certainly not the time to make excessive mistakes in this kind of financial operations.
Make transfers within the bag
If you see that the market value in which you are positioned at a certain moment loses a lot in the financial markets, you can carry out a transfer of positions to others that have a better performance in the equity markets. This should be done when you are positioned on a value clearly bearish and you see that there are others that show a diametrically opposite trend. That is, they are governed by an upward guideline that allows you to make the savings profitable with greater guarantees of success.
The only drawback of this very special strategy is that you will have no choice but to assume a higher expense for the commissions of the operations of buy and sell. Since you will have to do it, both when closing positions in the first of the securities and then in the new proposal that you have chosen to solve the losses you had in your securities portfolio. In any case, it will not be an excessive outlay if your financial contribution is really powerful. Either way, you will have to value the operation to avoid complicating things in the equity markets.
When to hold positions?
One of the scenarios that may arise are the reasons you have at this time not to abandon your positions on the stock market. When there are losses in the income statement of your securities portfolio. One of the reasons for taking these measures is that your term of stay is aimed at the environment and above all long term. Because in fact, in these scenarios you should not worry about the stock market going down, even if it is under intense intensity. Not in vain, your term of stay can allow you these drops in the price.
On the other hand, if this is the scenario in which investments are presented to you, you can take advantage of depreciations in stock values to increase your positions proportionally. This is a model that is even more useful in values than they distribute dividends among its shareholders. Because you can get a fixed and guaranteed return every year that is higher than before. Not surprisingly, this is what companies themselves do to acquire a much more powerful treasury stock than before. Buying the shares at much more affordable prices.
Slowdown yes, recession no
"The high point of the cycle is behind us, but solid levels of activity remain, led by emerging countries and supported by favorable financial conditions", say the analysts of Renta 4 Las emerging economies will continue, in 2019, to increase their weight in world GDP. If we talk about developed countries, the Income Analysis 4 Banco team estimates a slight slowdown led by lower growth in the US, once the impact of the tax reform has been left behind. In Europe, the focus of attention will be on the Brexit negotiations and its ultimate effect.
With regard to Spain, in 2019 it will remain at the head of Europe in terms of growth, but losing some momentum compared to the previous year. This context, of moderation in the growth rate with controlled inflation, will allow the monetary policies of the main Central Banks to continue to normalize gradually. The Fed will approach the neutral level of rates, although it could slow the rise if there is an excessive slowdown.
End of QE
In Europe, the ECB is expected to impose a very gradual normalization in the face of moderate growth, contained inflation and political risks like, for example, Italy. In this way, the end of QE (quantitative easing) should materialize this December 2018 and we could see the first rise in interest rates in the last quarter of 2019, according to estimates by Renta 4 Banco analysts. In any case, they are topics that you should analyze and especially consider from these precise moments.
Regarding the Bank of England, "we only have to wait and see the possible effects of Brexit on growth and inflation," while the Bank of Japan will maintain, for the time being, a broadly expansionary monetary policy. In this general scenario of financial markets, both equity and fixed income, there will be no choice but to be very attentive to all the news that the most relevant events in this current year will bring. To the point that it will be of great help so that you can make your decisions in the equity markets from now on.