Few people are as decisive in the future of equities in the old continent as it is today President of the European Central Bank (ECB), Mario Draghi. Supermario as it is often called by some financial analysts. His decisions have such repercussion in the stock market that any comment can generate rises or losses in the European stock indices. To the point that the financial markets are responsible for measuring all their sentences, even their semicolons. It is one of the benchmarks for investing in equities, as it has been in recent years.
Every meeting held by the European monetary body is followed with great expectation by all kinds of investors. What they see in their words, and why not in their silences too, the most suitable tool to base your decisions. Either to enter the financial markets in a decisive way, or on the contrary to undo positions more forcefully than usual. As they say vulgarly, what Mario Draghi says “goes to mass”. It will be a clue that you can obtain to know what you have to do in your relationships with the always complicated world of money.
Not surprisingly, many investors do not make movements in the equity markets until Draghi manifests himself on an economic issue of particular relevance. This has been happening since he came to preside over the highest monetary body of the euro zone. Much more than what happened with his predecessor the French Claude trinchet. Not surprisingly, there are many small and medium investors who currently call it “the Draghi era”. Of course, they are not lacking in reasons given the movements experienced in recent years.
Draghi and interest rates
The main reason for maintaining this palpable interest is due to the importance of interest rates at the current moment in European equities. In a few moments when the price of money is at historical lows by being at 0%. In other words, the price of money is practically zero. But now, everything seems likely to change at the end of years with the first rate hike in many years. Where investors of course will be waiting for what he does, but also what he says, the wizard of European equities, Mario Draghi.
For a reason that is very easy to understand and that is that the current downtrend benefits the stock market and its investors. Not surprisingly, it is a measure that is always very well received by the financial markets. It is not surprising, then, that its evolution in recent years has clearly bullish. Although any change in this financial asset can derail the stock market outlook. Because in effect, the rate hike would not be well interpreted by the financial markets. At least in the short term. Another very different thing are other longer periods of stay.
In this general setting, Draghi's words will be analyzed to the smallest detail. As the main point of reference for all the stock exchanges on the continent and perhaps with an even more powerful geographical impact. You will not be able to forget the next appointments of the maximum community representative. Perhaps it can influence your next decision to buy or sell the securities that are on your radar. You will not be the only investor who goes through this situation since to measure the state of this financial market nothing better than what the influential Italian banker can say and imply.
ECB meetings
One of the signals for you to make a decision on your investments in the stock market is determined by the meetings held every month by the leaders of the monetary politics community. The foundations are usually laid for the decisions that the ECB will make in the coming days. With a significant impact on the financial markets, both in one sense and the other. You cannot forget that the days when these meetings are held, the stock markets show greater volatility. With higher margins between its maximum and minimum prices.
After these celebrations, the financial markets show a more defined trend than until now. Not surprisingly, decisions are analyzed in depth and investors impose their verdict in the form of purchases or sales, based on their interpretations. If you take advantage of this investment strategy, you will have much easier not to make mistakes in decision making. To the point that you will have more advantages to optimize stock operations.
The most sensitive values
Either way, there are a number of listed companies that are more receptive to announcements from the monetary authorities. They are especially the financial entities that fall or rise in their prices with greater intensity than other values of the variable income. This reason is mainly due to its greater exposure to monetary policies promoted by the European central bank. Hence, its volatility is higher and there are many differences in the price of those days. Another of the sectors most influenced by these decisions are those coming from the cyclical sectors of the economy.
In any case, you cannot forget that the reaction of these sectors is more irrational, with percentages, in one sense or another, that can even approach the 5% level. It is in these proposals where you can develop your trading strategies with greater comfort. Although it is a class of operations that is only reserved for investors with more experience in the financial markets. Especially if the dominant trend is clearly bullish. With greater opportunities to do business from these investment approaches.
Tips for successful investing
So that you can channel your investments with greater security guarantees, nothing better than importing a series of recommendations on what you have to do from now on. It will be a way for you to make fewer mistakes, but above all to optimize operations in the best possible way. You will only have to put them into practice with determination and a little caution. Through the following lines of action that we will expose you below.
- It is very prudent wait for these meetings to take place so you can make a more informed decision. It will be the best way you have to protect your financial contributions. With a real base on which to impose your purchase orders in the financial markets.
- If your operations are going to be aimed at the very short term, there is no doubt that your purchases can be more aggressive than on other occasions. You cannot forget that the reactions of the markets these days tend to be more violent. For better or for worse, depending on each case.
- You will have to be very aware of all movements that develop in the equity markets. Because in effect, it will be very important that you adjust the purchase and sale prices very well. So that the operation is carried out correctly and in accordance with your interests as a small and medium investor.
- You run the risk of be late for the climbs, if these actually occur. In this sense, you will have no other solution than to be aware of the evolution of the equity markets from the moment they open.
- If you do not want to be negatively surprised, you have the alternative of imposing a loss protection order. So that in this way you are in a better disposition to control movements in stock prices.
Very relevant information
There is no doubt that the decisions made by the European issuing bank will determine the balance of your investments. For this reason it is very important that you know the dates on which they are developed and that they are included in your work planning for the next few months. Perhaps the success or not of these operations will depend on this information. So that you are in a better position to boost your purchases and sales from now on.
In this sense, you should remember that the ECB meets every week. But even more important, are the statements of Mario Draghi and that they give the guidelines on what they are going to say during the next few days. Normally you will not have problems accessing it since this information it is reflected in almost all the media. Even with an exhaustive interpretation by the most famous financial analysts. Where they will tell you what the path that equities can take from those moments.
However, the main drawback of using this peculiar strategy is that you can be late. Because in the stock market an old axiom of "buy with the rumor and sell with the news" applies. If you carry it out, you will have a lot of earned travel to achieve your goals. Because in effect, you cannot forget that equities anticipate the news and economic scenarios. You will have no other solution than to be very fast in your movements in the markets. So that in this way, you can increase the balance of your checking account. Which is at the end of the day the only thing that is.