All forecasts suggest that this trading year could be negative for the interests of small and medium investors. After many years in which investment in equity markets has been very positive, with annual returns on savings around 10%. Now it seems that this trend has broken, but with the advantage that there are financial products that can pick up the downtrend in financial markets. As in the specific case of credit sales and that we are going to explain how to formalize this very special model for private investment.
Sales on credit is a model that is fundamentally based on the fact that you can benefit from decreases in stock markets around the world. Because in effect, any depreciation in securities or stock indices can be used by small and medium investors to achieve a substantial return on savings. However, the greatest danger in their contracting stems from the fact that the losses are more pronounced than in other class of financial products, such as the purchase and sale of shares on the stock market in the most classical sense.
While on the other hand, credit sales is a more advanced investment model that is also characterized by imposing shorter retention periods than in other formats. They are usually operations that go in terms of 3 or 4 months and that is the period in which the values must be depreciated. In any case, they are movements that carry many more risks and therefore you will have no choice but to provide further learning in this kind of operations in the equity markets. You cannot forget that there is a lot of money that you can leave in the end.
Credit sales: open positions
The first question that you should ask yourself from now on is when to start operations with these downward movements. Well, it is very clear that it materializes when the stock markets start or continue with a clearly downward trend. The more they depreciate the better for your interests as small and medium. Among other reasons because your capital gains will be much more substantial. Do not be scared because its mechanics work in this innovative way and that allows you to always have business opportunities in the equity markets.
On the other hand, it must also be pointed out very especially that credit sales constitute a powerful tool for adapt to all scenarios in the bags of all the world. This is a substantial difference from the traditional buying and selling of stocks on the stock markets. Any difference can be a very important monetary amount and for this reason credit sales should not be formalized for very significant amounts as they can have a great impact on the income statement of your savings account.
What assets does it work with?
In our country, operations are more limited to stock market indices than to listed companies. In this sense, there are short operations on all the main equity indices in the old continent. That is, about the Ibex 35, CAC 40, DAX, etc. But also on the most relevant securities that comprise them and that usually coincide with those with the largest capitalization. For example, in Santander, BBVA, Endesa or Inditex, among some of the most important companies listed on the stock market.
On the other hand, it is much more complex to carry out credit sales on mid- and small-cap stocks. They are not sensitive to this kind of operations and on more than one occasion these movements have been prohibited because they can condition the configuration of the prices of these proposals in the financial markets. Beyond other considerations of a technical nature and perhaps even from the point of view of its fundamentals. That is, their operations are more limited in number.
Are you interested in these products?
In any of the cases, there is no doubt that you are interested in analyzing whether it is a product intended for the small and medium investor profile that you represent at the moment. Because it is very important that you know when it is worth hiring this kind of unique sales. As for example, in the following situations that we expose you below:
- Before a high intensity drop in equity markets and develop over a longer period of time.
- When a Change of trend, going from bullish to bearish since it is when the bearish movements are more accused.
- In the moments when the values pass a support and a downtrend of special consideration begins and that can take their prices much lower than they are at the moment.
- In moments of clear economic recession which is when equity markets depreciate the most, even with violence that draws the attention of small and medium investors.
- In values that are in free descent which is the most negative figure that they can have since they do not have support below and their prices can be directed much lower than until now.
- And in general, in all recessive movements in the international economy and that cause the stock markets to collapse in a few days. It is an opportunity that you can take advantage of right now.
Risks in operations
While on the contrary, they are operations with very high risks and that you should analyze so that you do not have any other surprises in the coming days. Not surprisingly, there is a lot of money you can lose in each of the operations that have this feature. And among which the following stand out that we mention below.
- Their expiration dates They are much shorter and therefore you have to be more careful when signing a sale on credit.
- They are investment products that have commissions and expenses in its management or maintenance that are more demanding. To the point that you will spend more money on its formalization.
- Like you investment approaches they are not fulfilled in the end, there is no doubt that you will be able to pay dearly for this decision you have made to channel your investments through credit sales.
- They are more complex to understand and that require a certain learning in their operation. If you do not comply with the conditions, it will be better for you to abstain from operations and dedicate yourself to other financial products.
- As it is a credit modality, it is a financial product that is very more penalized than the rest. Do not forget it from now on since you can meet many obstacles on the way that you will have until its expiration.
As you may have seen, credit sales is an investment model that has many lights and shadows along the way. It is convenient for you to analyze it since it is a product that requires a greater economic effort on the part of small and medium investors. Where it is not convenient for you to formalize it without any rigor or technical analysis. Because at the end of the day, what is involved in the end is to make personal wealth profitable, not to carry out any kind of experiment in the stock market.
For that there are other more suitable financial products that do not require so many risks in the operations that you are going to carry out from now on. Not in vain, keep in mind that you are facing a different investment product and that of course it is not about buying and selling shares in the equity markets. Not much less, if not that on the contrary it is governed under other completely different parameters and this must be taken into account.
Intended for the short term
Small and medium investors have the possibility of turning to various products to invest when equities fall in the short term. In most cases these are derivatives whose purpose is to achieve high profitability in any market situation, whether it is bullish or bearish. Either way, they are products that are distinguished by both the sophistication of its operations as well as the high risk it entails for the investor's interests. And that while you can earn significant capital gains, you can also lose a lot of money along the way.
One of the most characteristic products are the so-called credit sales, and of which this article is the subject, and which has a very well-defined operation. Where the financial entities are in charge of lending the securities that the client wants, to then sell them at the price of the day. Then the bank gives the user a period to return the values at the price they have then and which, according to its forecasts, will be lower than the current one. In this way, the investor will get the difference as long as the result is positive on the bottom line.