One of the fears on the part of small and medium-sized investors at the moment is that public debt is very high and could weigh down the evolution of equity markets in relation to the main national benchmarks. This is one of the issues that in recent months has led to the buying and selling shares by retailers. For this reason, it is increasingly common to collect information on the real scenario of public debt in our country. Not in vain, in a certain way it will be the trigger for the evolution of the stock markets.
First of all, it must be explained that public debt or simply plain sovereign debt is constituted above all in the set of debts that a state maintains against individuals or other countries. That is, they are the financial assets that they owe to third parties and that may or may not constitute the wealth of a country or economic zone. Not surprisingly, it cannot be forgotten that a way of obtaining financial resources is constituted by the state or any power public normally materialized through the issuance of securities or bonds.
In this sense, with regard to Spain, in December 2018 the public debt has grown by 8.248 million euros compared to October, so that it has gone from 1.160.976 million to 1.169.224 million. Thus, public debt in this analyzed period has been 96,96% of GDP and per capita debt, which has decreased this month, has been 24.882 euros. If we compare it with that of November 2017, we see that in the last year, the debt has grown in tone to 600 euros per inhabitant.
Public debt in Spain
On the other hand, the public debt in our country has grown in the third quarter of 2018 at 11.736 million euros and stood at 1.175.704 million euros. This figure means that the debt reached 98,3% of the Gross Domestic Product (GDP) in Spain, while in the previous quarter, second quarter of 2018, it was 98,1%. Therefore, if we compare the debt in Spain in the third quarter of 2018 with that of the same quarter of 2017, we see that the annual debt has increased by 42.327 million euros.
All these important ones are analyzed in great detail by investors to determine whether or not it is the most opportune moment to enter the national equity markets. It's a very reliable parameter that can help you make the best decision in any of the conjunctural scenarios in the Spanish economy. To the extent that we can rely on it to develop a well-defined investment strategy to achieve success in trading in the equity markets.
How to interpret these data?
It is very interesting to analyze this economic parameter in order to take a strategy to develop investments. In this sense, it will be very useful to look at the term to which it is going directed investment and the capital that can be invested this year. For this reason, it is advisable for the small investor to go to another series of simple and useful guidelines so that their investment develops in a satisfactory way to their interests.
For the short term, speculative cut values should be selected and that have a very wide fluctuation margin. That is, let them be highly volatile between the maximum and minimum price of the session. This strategy is not recommended for a year of uncertainties such as the one that may occur in this current fiscal year and for which it should be expected that another more favorable year for the interests of the equity markets will arrive.
Longer periods of stay
For the medium or long term, companies with good management ratios should be chosen, and that generally their stock market oscillation is not very high. They also have the additional advantage that they reward the shareholder with the payment of annual dividends. It would be the best option to make contact with equities this year, due to its risk-return ratio. With an average profitability at the moment by the Spanish stock market that is close to 5%. In addition, it is a very original way to create a portfolio of fixed income within the variable. Of course, regardless of how the shares are listed on the financial markets.
Usually when we talk about debt we mean the public. In the third quarter of the year in Spain, the Spanish debt stood at 1,17 trillion euros, 98,30% of GDP. Of that debt, 961.998 million corresponded to the State and the rest to other administrations. On the other hand, companies also get into debt outside our borders. Of the aforementioned debt of the Spanish State, 44,76% was in the hands of foreigners, 430.573 million. But this external debt is not the only one, companies also borrow from abroad.
According to the Bank of Spain, if we take into account the total external debt this amounts to 2,004 trillion euros, 167% of GDP. But since Spanish companies invest abroad, the net balance of this debt (what we owe less than what they owe us) amounts to 965.000 million euros, 80,6% of GDP.
Make operations profitable
At the moment in which the capital gains begin to appear on the investments made, it is normal for savers to consider whether it is the right time to sell or, on the contrary, it is better to wait for the benefits to be more bulky. For this reason, it is necessary to previously draw up a strategy in which the investor's objectives are delimited. They will be targeted based on their profile, the target deadlines and the contributed capital, which will be the ones that decide in the end if the small and medium investor decides on one or another stock market alternative.
In situations of upward trend, the most sensible thing is to hold the investment until obtaining better prices in its quotation. Or on the contrary, until signals appear indicating the completion of this process. Although it should be noted that there is a risk of fall into extraordinary situations that can make a value fall significantly with the consequent losses in your income statement. It is necessary to be very clear about the objectives pursued in each of the investments made from now on.
Analyze the risks of the operation
On the other hand, it is highly advisable to choose a formula that combines the equation between security and risk as a strategy to preserve the amounts contributed. Especially in those bearish periods where it is easier than the small capital gains obtained become losses after a few trading sessions. That is to say, with the return to the red numbers for the investor, with the dilemma then of whether to sell with handicaps or to go even deeper into them. It is one of the most complex situations a retail investor can go through. Beyond other technical considerations and even from the point of view of its fundamentals.
While on the contrary, also the publication of good data on the national public debt can serve to take positions in the equity markets in a much more aggressive way than usual. This is because it can be a very positive signal for the medium and long term in the stock market. Because it indicates above all the stabilization of the economy of a country or economic zone. On the other hand, it should be noted that it is data that offers investors a lot of confidence to develop their investments with special optimism.
Watch out for rebounds
In any case, you will always have to be very attentive to the rebounds that may develop. Because at the end of the day they can be a bearish trap that can cost you dearly from these precise moments.
There is no trust and strong hands of the financial markets are not willing to invest either. It is an ideal setting for a rebound to take place. In such a situation, finding reasons for optimism is difficult and it is difficult for money to go to the parquet floors stock exchanges. Investors falter, sales persist, and the feeling of free fall dominates. The oversold has very high percentages, in some cases out of the ordinary.
It is then, when, by surprise, this temporary upward movement begins that catches, with the changed pace, countless savers who do not have confidence in equities because they believe that the prices of the securities are going to fall more in the coming sessions. Experience in the evolution of the stock markets shows that neither the rises are unlimited nor the falls indefinite.
They will be targeted based on their profile, the target deadlines and the contributed capital, which will be the ones that decide in the end if the small and medium investor decides on one or another stock exchange alternative, this is because it can be a very positive signal for the medium and long term in the stock market-